The Nasdaq ended up 1.77% on Thursday after falling nearly 1% on Wednesday amid a broader market and cryptocurrency sell-off.
But despite today’s positive turn, the tech-heavy index is down more than 4% over the last three weeks after hitting a new all-time high on April 26.
Tech stocks have been hit as the economy reopens boosting profits for everyone from banks to automakers, and as inflation fears dominate investors minds.
And Paul Meeks believes the pain for tech could continue.
“The carnage that we’ve seen over the last couple of days unfortunately could only be the start of it,” said Meeks, who ran the world’s largest technology fund during the late 1990s and the current portfolio manager at Independent Solutions Wealth. “We’ve already had a beating in the tech sector close to about 10%. I think we could easily do another 10%.”
Meeks isn’t the only one who seeks pain ahead for the group.
“We still don’t think the pain in big tech is done,” said Lori Calvasina, head of U.S. equity strategy at RBC Capital Markets. “Eventually, attractive valuations seem likely to bring buyers back to the space given strong fundamentals, but that condition simply hasn’t materialized yet.”
“Don’t give up on tech,” Meeks added. “It’s always the most innovative companies on the planet Earth. It’s always where you want to be. They’re going to have some great buying opportunities. But it’s going to be a bit lower.”
As for where to invest, Meeks said he recently turned positive on one corner of the market he used to believe was too speculative: cryptocurrencies.
Cryptocurrencies themselves have had a wild week, with Bitcoin dropping more than 30% Wednesday morning before jumping 33% in the afternoon, and with Ether and Dogecoin also seeing massive sell-offs followed by big bounces higher.
“I like those plays,” Meeks said. “And I do, long term, like the semiconductor trade. Not short therm, because it’s highly volatile, but long term, I do like Micron (NASDAQ: MU) very much and Applied Materials (NASDAQ: AMAT), which is a maker of semiconductor equipment.”
All four stocks have dropped lower over the last month, with Square down more than 18%, PayPal down nearly 8%, Micron down 10%, and Applied Materials down over 7%.