Technology stocks led a three-day market rout last week , but some on Wall Street are keeping the faith in the trade due to one key factor: earnings. “There is no sign yet of a slowing in their earnings growth, which continued to run near 30% in Q4,” said Deutsche Bank strategists led by Parag Thatte in a note on Friday. While analyst consensus estimates anticipate tech profit growth slowing to a “still-strong” 23% this year, and 20% in 2027, forward estimates for megacap growth and tech – even software – have actually gone up this reporting season, the New York-based strategists wrote. Software stocks in particular were drivers of the market’s losses last week amid mounting concern among investors that artificial intelligence could disrupt business models. The iShares Expanded Tech-Software Sector ETF (IGV) tumbled for eight straight days through last Thursday, finishing the down nearly 9%. The ETF, whose largest positions are in Microsoft , Palantir Technologies and Salesforce , entered a bear market at the end of last month and is down 22% so far in 2026. The Nasdaq Composite , meanwhile, closed out last with a 2% loss and the S & P 500 information technology sector fell more than 1%. For CFRA Research’s Sam Stovall, the recent volatility in the information technology sector was simply a “necessary digestion of prior gains,” as the group is still projected to see record earnings growth in 2026 and 2027. “CFRA equity analysts remind us that should these EPS growth estimates continue to hold up, investors will be pleased they stayed the course,” Stovall, a chief investment strategist, wrote on Monday. Fourth-quarter earnings being released now are “robust”, according to the JPMorgan market intelligence desk, noting corporates are on pace to post the fastest revenue growth since the third quarter of 2022 and see record high profit margins. Technology stocks are leading the way, with a 30.4% rise in earnings on 20.4% growth in revenue, he said. “AI exhaustion is palpable” and may continue to result in “Magnificent Seven” and AI selling, but software buying, the JPM trading , noting it remains “tactically bullish” on the broad market.
Investors are growing wary of tech stocks. Wall Street says stay the course for this one reason
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