The technology sector delivered big market gains, pushing the S&P 500 (^GSPC) and the Nasdaq (^IXIC) to reach record levels this week. Oppenheimer chief investment strategist John Stoltzfus joins Morning Brief to analyze the rally and its dynamics.
“We’re all in an upgrade cycle because technology is deeply ingrained in business and consumer lives. It’s not just about phones. It’s people who have apps for airlines, newspapers, magazines that have recently been noticed on older phones when they try to upgrade, “sorry, your operating system needs to be upgraded” and you find out that your old phone or computer cannot don’t take it, it’s time to go back to the electronics store,” says Stoltzfus.
The race to AI has been a major catalyst for the tech industry, and Stoltzfus sees no signs of slowing down: “It doesn’t seem like the technology in this AI story is approaching a level where it’s going to stagnate. in other things, basically, if you don’t hit a plateau, and that’s kind of what happened in the tech bubble. » As AI continues to push the sector to new heights, he hopes to raise his year-end target for the S&P 500.
For more expert insights and the latest market action, click here to watch this full episode of Morning Brief.
This article was written by Mélanie Riehl
Video transcription
The tech rally that we saw because it was pushed, the NASDAQ pushed, pushed the S&P to record highs this week as enthusiasm around artificial intelligence once again sweeps Wall Street, the The tech sector is on track for its best week in about seven months. .
For more.
We want to bring in John Stolas.
He’s Oppenheimer’s chief investment strategist, John, it’s good to see you again.
So tell me about how you envision this excitement that we’re seeing manifest in a handful of these technologies.
So, again, and really, what does this signal for the future of the market as a whole, right?
Well, great, great to be on Yahoo Finance and talking with you and Brad today.
Um, I have to say when you look at this, what it really reminds everyone is that we’re all in an upgrade cycle because technology is deeply ingrained in business and consumer lives.
Um, it’s not just about phones.
If people who have apps for airlines, newspapers, magazines have recently noticed on older phones when trying to upgrade, sorry, your operating system needs to be upgraded and you find out that your old phone or computer can’t support it. .
It’s time to head back to the electronics store.
And probably some of the results we’ve seen in at least one company, I can’t name specific names because I manage money, but it would indicate that electronic sales is not dead and we think it will probably increase.
So part of this is that when the genie comes back, when the genie comes out of the bottle, it doesn’t go back to people.
And so, with that in mind, John, not talking about specific names, but maybe talking about more general themes that we’ve seen prevail in the markets.
How do you think how many benefits there are to this business, particularly within Generation A, we’ve seen companies that have talked about it on earnings calls or announced some type of update product or software update.
They seem to be the beneficiaries.
Well, we should say Brad, you know, the old adage that trees don’t grow to the sky.
Uh uh, that’s definitely going to come up at some point.
But right now, it doesn’t seem like the technology in this AI story is getting anywhere near a level where it’s going to solve the problem.
Seems like it’s morphing into other things again.
Uh uh Essentially, if you don’t hit a plateau and that’s what happened in the tech bubble, it’s kind of a plateau.
People were saying that we will have a million eyeballs in so many years, but without any profitability for them.
These are profitable, growing and expanding businesses, and innovation is really taking over.
That said, any catalyst the Bears can find to sell and take profits without FOMO, they will do it.
And, you know, we had this a while ago.
If you think about that company you just talked about, it’s now the largest market cap in the S and P 500.
Just a few weeks ago, many people were saying it was done and it wasn’t done at all.
He was just ready to move on to the next chapter.
So we remain very positive on technology, communication services.
We like industrials, but we also like financials and we think consumer discretionary is hopelessly oversold this year.
If you look at the numbers from last year’s lows, they are still up very well.
Um, more than 20%.
So these are just different sectors, going through haircuts from time to time and pauses, but it seems like a good time for stock buyers.
So, John, given that your year-end goal for S and P is 5,500, we’re here today just above 5,400.
What I guess, what do you need to see to increase your target or be convinced, it seems like you are convinced that maybe the market is going even higher this year.
Yes.
Um John, I have to say here that, uh, you know, when we started the year, we were among the highest on the streets.
It’s not the highest.
I think some people say we were the best.
We didn’t pay much attention to it.
Exactly.
Were we the highest or not?
But we got to 5,200 afterwards, we had to raise it in the first quarter, to 5,400.
And our discipline is that we don’t increase our target unless the S&P closes at or above our price target.
It therefore seems imminent that we will have to ask ourselves whether or not we will raise our target for the end of the year.
Um, probably over the next few days or weeks, depending on how the market is treated by investors and traders.
