Tech stocks have surged 21.5% in first half 2024, but overvaluation concerns exist

From Investing.com: 2024-07-13 05:15:31

Tech stocks have rallied in the first half of 2024, driven by gains in the semiconductor and computer hardware sectors due to AI advancements, outperforming the broader market significantly.

Surging 21.5% in the first half of the year, tech stocks present opportunities and challenges for investors, according to Bernstein Private Wealth Management.

Although the tech sector has seen impressive gains, performance has been concentrated, with Nvidia accounting for a large portion of the outperformance.

Valuation concerns arise as tech stocks trade at a 49% premium to the market, approaching levels seen during the dot-com bubble, raising risks for investors.

Tech’s expected growth premium remains high, driven by the semiconductor sector, but potential overvaluation risks exist, especially with uncertainties in global markets.

Continuous support for tech momentum comes from rising AI adoption and expectations for economic recovery, while lower interest rates could further boost growth stocks like tech.

Bernstein recommends a balanced approach to investment strategies, suggesting maintaining a market-weight allocation to tech and a barbell strategy between growth and value-oriented tech stocks.

Opportunities may also lie in selectively investing in SMID cap names with more attractive valuations and lagging performance, according to Bernstein.



Read more at Investing.com: What should investors do with tech stocks after a 21.5% H1 rally? By Investing.com