These two subsectors of technology are trading at a discount to S&P 500
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May 10, 2022
Investor Brand Slingerlend sees opportunities within tech in software stocks.
The tech-heavy Nasdaq Composite is now down more than 25% for the year.
The ongoing sell-off in technology has created ample opportunities for investors, particularly in software and semiconductors, both of which are trading at a discount to the S&P 500.
Paul Hickey dubs semiconductors a safe bet
The VanEck Semiconductor ETF (SMH) has lost nearly 30% since the start of the year 2022, which, as per Bespoke Investment Group’s Paul Hickey, spells opportunity. On CNBC’s “TechCheck”, he said:
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Semiconductors are trading at a discount to the S&P 500. Historically, they trade at a 20% premium. Plus, since the middle of April, the relative strength in semis has actually picked up a little even as the S&P made new lows.
For investors that are interested in playing the tech sell-off, therefore, the semiconductor space could be a relatively safe bet, Hickey added. The tech-heavy Nasdaq Composite is now down more than 25% YTD.
Why Brad Slingerlend likes the software space
On the other hand, NZS Capital’s Brad Slingerlend, sees more opportunity within the tech space in the software stocks. On a separate interview with CNBC’s Morgan Brennan, he said:
These companies are being treated as if they’re a fad, but they are growing and investing and have a lot of opportunity ahead. It’s a known business model that’s been around for about 50 years, not something that just popped up during the pandemic.
A few of the notable names in particular that he’s bullish on include Salesforce and Zendesk. The SPDR S&P Software & Services ETF is down over 30% for the year at present.
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