synopsis

Technology stocks, especially the high-profile big techs, have driven the current bull market, which started in October 2022.

The Invesco QQQ Trust ($QQQ), an exchange-traded fund that tracks the Nasdaq 100 Index, traded down over 1% in Monday’s premarket. Waning rate cut hopes and the resultant increase in bond yields have weighed down on stocks, especially after recent data points pointed to a vibrant economy.

Technology stocks, especially the high-profile big techs, have driven the current bull market, which started in October 2022, as investors bet on artificial intelligence (AI) and its all-pervasive nature. 

After raising the Fed funds rate to a 22-year high, the central bank announced three quarter-point cuts since Sept. 2024. Recent strong labor market data have reduced the probability of another cut at the upcoming January Federal Open Market Committee (FOMC) meeting.

A higher interest rate environment is unfavorable for corporations as it impacts demand and raises costs. 

In a note released Sunday, Wedbush analyst Daniel Ives said he believes tech stocks will move higher in 2025 despite the risk-off mood at the start of the year due to macro concerns.

The analyst said, ‘’The underlying demand picture for tech and Cap Ex being allocated to AI has been unparalleled as we saw firsthand talking to CIOs and IT managers at CES last week in Las Vegas.’’

‘’We ultimately view pullbacks like these as golden buying opportunities to own the winners in the AI Revolution as more IT budget dollars head towards this technology wave with the 2nd/3rd derivatives of AI now set to benefit.’’

The analyst expects that the upcoming tech earnings season will clarify how the $2 trillion AI capex will change the tech landscape going forward. According to the analyst, the tech basket approach to AI, comprising a diversified group of chip, software, and tech stalwarts, is the right way to navigate the current climate.

Ives reiterated his view that the following 10 stocks are the top names to own this year:

  • Nvidia Corp. ($NVDA)
  • Microsoft Corp. ($MSFT)
  • Amazon, Inc. ($AMZN)
  • Alphabet, Inc. ($GOOGL) ($GOOG)
  • Salesforce, Inc. ($CRM)
  • Palantir Technologies, Inc. ($PLTR)
  • Tesla, Inc. ($TSLA)
  • Apple, Inc. ($AAPL)
  • Oracle Corp. ($ORCL)
  • Snowflake, Inc. ($SNOW)

The QQQ is among the top five trending tickers on Stocktwits currently. Sentiment toward the exchange-traded fund (ETF) continues to be bearish (40/100), with message volume staying ‘low.’’

QQQ sentiment and message volume January 13, 2025, premarket as of 6:33 am ET | Source: Stocktwits

A retail watcher on Stocktwits raised the possibility of a 2022-like crash if the week's inflation numbers come in hotter than expected.

Another flagged the likelihood of sentiment reversing and said Nvidia and Apple could be the key for tech sector’s trajectory on Monday.

In premarket trading, the QQQ ETF was down 1.20% at $501.10 as of 6:33 a.m. ET.

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