Deutsche Bank upgrades tech stocks after selloff

Deutsche Bank upgraded global technology stocks to "overweight" following a sharp market selloff, citing improved risk-reward due to reduced investor positioning and AI demand concerns already priced in. Strategists led by Parag Thatte and Binky Chadha noted mega-cap tech underperformed the rest of the S&P 500 by over 16 percentage points in three weeks, with the sector falling 11% while the index rose nearly 6%. Investor positioning dropped from elevated to neutral levels, aligning with expected earnings growth of about 10%, compared to 47% in Q3 and a 36% consensus forecast for next year. The bank highlighted that past tech rebounds averaged 32% returns, outperforming the rest of the S&P 500 by 30 points, while the index typically gained 16% over three months. Corporate earnings outside tech remain resilient, with median S&P 500 growth expected at 14.4%, near a two-decade high. Risks include potential tech regulation after US midterm elections and geopolitical escalation, though oil prices are about 65% above fair value, suggesting much uncertainty is priced in.