By Harry Robertson
LONDON (Reuters) - The sharp sell-off in tech stocks has created opportunities to buy into profitable companies at a cheaper price, the chief investment officer of HSBC's private bank said on Tuesday.
The tech-focused U.S. Nasdaq 100 index dropped 3% on Monday, as investors fretted about the U.S. economy. It has slid 12% from a record high in July, with some investors also worried that artificial intelligence has been overhyped.
"In technology, the froth has been removed from the valuations," Willem Sels, CIO for Global Private Banking and Wealth at HSBC, said in an interview on Tuesday, referring to the price investors must pay for the earnings companies deliver.
"We do believe that AI and technological innovation more broadly will endure, will continue to create productivity gains... We don't flee from it," he said. "There are opportunities in technology, and technology is not just the Magnificent 7."
The so-called Magnificent 7 group of stocks include those of the U.S. market's most valuable companies, such as Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN) and Microsoft (NASDAQ:MSFT)
Many of the companies closest linked to AI were hit hard on Monday, with chipmaker NVIDIA (NASDAQ:NVDA) down 6% and Microsoft falling 3%. Markets regained some ground on Tuesday, with the Nasdaq up 1%.
Sels said he expected moderate, but positive economic growth and that he favoured broadening out into medium-sized companies, including in the tech sector, that can continue to deliver earnings.