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The technology sector (XLK) is rebounding from losses earlier this week after the latest AI model from Chinese-owned DeepSeek sent chip stocks plunging. Allspring Global Investments Senior Portfolio Manager and Head of Capital Allocation Margie Patel joins Market Domination to discuss the tech sector outlook as the earnings season progresses.
Patel acknowledges that she expected 2025 to "be a year of deceleration in growth" for tech, adding that there is still "uncertainty" regarding DeepSeek's impact. However, she notes that historically, new product entries into the tech market tend to create increased demand, "so everybody really benefits."
Addressing valuation concerns in the tech sector, she points out that Big Tech PE ratios (price-earnings) have experienced "erosion" in recent months as investors worry about slowing growth and negative capital expenditure impacts.
Nevertheless, Patel remains optimistic, projecting 20% earnings growth for the sector in 2025, which would "justify" current valuations.
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This post was written by Angel Smith