Tech stocks could face challenges in 2025, an analyst warns. Despite the boom so far, there is a possible warning signal emerging in the market that investors should take note of.
• Tech stocks perform well in 2024
• Analyst sees worrying sign for 2025
• Rotation into software stocks
Tech stocks had a strong performance in 2024. Above all, stocks like those of the chip giant NVIDIA were able to make big profits. But one analyst sees a worrying sign for 2025.
Analyst sees cause for concern
According to John Krinsky, chief market technician at BTIG, the decline in the technology sector towards the end of 2024 is more than just bad news, but makes it by far the worst sector in the S&P 500, as he wrote in a note to clients in late November, according to MarketWatch – that gives cause for concern Worries.
In his statement, Krinsky pointed out that although the tech sector was at the top of the ranking of the 11 sectors of the S&P 500 with an increase of around 36 percent at that time, it was almost at the bottom over a one- or three-month period end.
“It has lost significant momentum and relative strength, both in capitalization-weighted and equal-weighted terms,” MarketWatch quoted Krinsky as saying. According to him, semiconductor stocks are the weakest link.
Rotation towards software stocks
However, there is also some “good news”: According to Krinsky, a rotation to other parts of the market has kept the expanding trade alive. The rotation in software stocks softened the blow.
This led to the industry-oriented SPDR S&P Software & Services ETF trading above its 200-day moving average for longer than ever in the last ten years – except during the rally after the corona pandemic. The relative improvement is a welcome development, Krinsky said, but “we would wait for a decline before increasing exposure to software,” he noted.
In addition, in his opinion, the bulls “need to really see a stabilization of semiconductors […]”to prevent a major collapse by 2025,” said Krinsky.
Editorial team finanzen.net
Selected leverage products on NVIDIA
With knock-outs, speculative investors can participate disproportionately in price movements. Simply select the lever you want and we will show you suitable open-end products on NVIDIA
The leverage must be between 2 and 20
Advertising