Tech stocks could crash any day now -- but they also might not be overpriced.
Tech stocks could crash any day now -- but they also might not be overpriced.
The biggest question on many investors' minds right now is: Are tech stocks overpriced, due for a sell-off, or poised for further growth? The tech-heavy Nasdaq-100 index has gained about 109% in the past five years, powered by enthusiasm for the artificial intelligence (AI) boom.
But tech stocks can be risky and volatile. The Nasdaq-100 can deliver both big declines and big gains. And right now, many investors have some healthy skepticism about AI stocks. Will AI really deliver the hoped-for gains in economic growth and productivity -- and if so, which companies will profit most?
If you're optimistic about the future of AI and want to keep buying tech stocks, tech exchange-traded funds (ETFs) like the Invesco Nasdaq 100 ETF (QQQM -0.63%) can be an easy way to invest in the sector.
Here are three good reasons to be bullish on tech ETFs.
1. Tech earnings are growing fast
The tech sector's earnings are strong and growing fast. According to an Oct. 9 report from FactSet, year-over-year earnings growth for the S&P 500 information technology sector increased to 65.1% in the third quarter (up from 57% on June 30).
FactSet also found that 81% of information technology sector companies in the S&P 500 saw an increase in mean earnings per share (EPS) estimate since June 30. The biggest contributors to the tech sector's increase in expected earnings this quarter were Nvidia, Micron Technology, Dell Technologies, and Intel.
These are all prominent AI stocks that sell semiconductors, chips, and servers to companies building AI data centers and infrastructure. As long as major AI hyperscalers keep investing hundreds of billions of dollars in capital expenditures, these suppliers of the AI boom are likely to keep prospering.
2. The AI build-out is not like the dot-com era
Averytin News Financial update.