A Goldman Sachs sector specialist believes one sector is offering a golden opportunity for investors after the recent sell-off reset valuations.
In a new episode of the bank’s This Is the Markets podcast, Peter Callahan, Goldman’s US technology, media and telecommunications sector specialist, says he’s now bullish on tech after the sector’s sluggish start this year.
“I think the Nasdaq’s lagged the Russell by almost eight or nine points to start the year. It is the slowest start on a relative basis we’ve seen in the last 15 years, matching 2021. And so put me on the side of the bull camp for tech from here.”
Callahan narrows down his call to large-cap technology names, which have been beaten down over the last few months, despite what he described as solid earnings profiles and heavy upfront cost absorption during the last reporting season.
“I’m looking at the large-cap tech stocks again. They’re down, again, anywhere between 5% to 10% to start the year. The earnings profile’s been good. We got a lot of the upfront cost associated with these storylines over the last earnings season. And so look for better execution and revenue growth in the months ahead.”
Turning to software, the tech strategist sees the broad correction as an opportunity for stock pickers to accumulate names that have been dragged down even though fundamentals remain solid.
“I think the sector is down 30% this year. A lot of ink spilled on kind of what’s going on as the market absorbs again some of this uncertainty that is arising from generative AI in the future years, where I think we’re at now.
And it’s about dispersion. Can you find opportunities because you’ve had kind of a high correlation sell-off where everything has kind of come down roughly this same amount at the same time, regardless of earnings, regardless of multiple, regardless of starting point.”
Looking ahead, he suggests the next phase may shift toward stock-specific differentiation rather than a blanket sector move.
“And now I think we’re at the point now where investors are going to try to be a little bit more judicious about dispersion. That’s my guess is going to be the story from here. If we do this again in three to six months, we’ll probably be talking a lot more about dispersion than we will be a sector-driven move.”
Callahan’s view positions the recent underperformance as a reset rather than a structural breakdown, with selective opportunities emerging as investors reassess valuations and earnings strength within the tech sector.
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