Wall Street Sees Optimism in AI-Sensitive Tech Stocks
Wall Street is witnessing a shift in tech stock trading, with investors showing increased optimism towards specific AI-sensitive stocks. Meanwhile, analysts are advising strategic bets and warning about potential risks.
Joe Mazzola, Schwab's head of trading and derivatives strategy, reports growing optimism among clients for AI-sensitive tech stocks like Micron Technology and Advanced Micro Devices. BofA's Arjun Goyal sees room for the AI bubble to expand based on recent price movements. However, hedge fund manager David Einhorn has cautioned about the risks of increased AI spending.
BofA strategists advise investors to bet on a six-month call spread on the Invesco QQQ Trust ETF, targeting a 9.4% gain by the end of March. Mazzola suggests a similar strategy for the Nasdaq ETF QQQ, noting that significant rallies are not required for profits. Michael Hartnett of BofA points out that historical stock market bubbles average gains of 244%, with the 'Magnificent Seven' still having room to grow after a 223% rise from their March 2023 lows.
Despite traders not positioning for further big gains in the tech sector, BofA strategists see new opportunities in the tech rally, particularly in the Invesco QQQ Trust. However, investors should remain cautious, as warned by hedge fund manager David Einhorn, and consider strategic bets advised by analysts.
