Regular readers of The Motley Fool would not need reminding that technology shares took a brutal beating in 2022.
But with the S&P/ASX All Technology Index (ASX: XTX) up 15.5% already this year, one expert has declared the sector is back with a vengeance.
DeVere Group chief executive Nigel Green said that financial updates from US tech giants this week would commence "The Great Rotation back into growth stocks".
"As market conditions shifted in 2022, investors dumped growth stocks, like tech, in favour of value stocks which were deemed more suitable to the challenging environment," he said.
"But what is happening now, we believe, is the beginning of a rebound."
Mixed results for tech giants
Green did admit the short-term results for big tech were mixed.
"Facebook's parent company Meta Platforms Inc (NASDAQ: META) has exceeded estimates for revenue in its fourth-quarter earnings report, with the stock soaring in extended trading on the results," he said.
"While Amazon.com Inc (NASDAQ: AMZN)'s earnings are expected at $0.15 per share, which would be an 89% decrease from the same quarter in 2021."
Green predicted that Apple Inc (NASDAQ: AAPL) would see declining revenue for the first time since early 2019.
"Alphabet Inc (NASDAQ: GOOGL), the parent company of Google, is expected to report a third consecutive quarter of declining earnings."
But this won't stop long-term investors piling back into the tech sector, according to Green.
He cited two reasons why The Great Rotation is on in earnest.
"First, valuations of tech and other growth stocks are currently low having been hit by the previous rotation into value stocks," said Green.
"Investors are now eyeing these super attractive entry points to top-up their portfolios as the trend is reversing."
Secondly, investors are looking forward to how macroeconomic factors might change.
"Inflation has seemingly peaked and interest rates are set to stabilise, which takes away a major obstacle for tech stocks."
Bet on still-cheap tech for strong returns
Green thus declared that "tech stocks are back" and urged punters to take advantage.
"Rotation into the right growth stocks will provide strong returns."
He warned, though, that this is not a time for investors to "buy everything".
"There will be big winners and losers. They must concentrate on high quality, profitable companies which can consistently maintain or steadily grow margin[s]."
And despite lukewarm results, the tech giants shouldn't be written off.
"[They] still have piles of cash, in some cases hundreds of billions of dollars, and remain enormously profitable," said Green.
"In addition, these companies maintain considerable user bases, world-class research and development, plus some of the smartest talent on the planet."
