Fidelity Viewpoints | Recent volatility in tech stocks presents a good opportunity

Global technology stocks have experienced heightened volatility in recent months, prompting investors to question whether the technology sector and AI theme still hold investment value. However, Fidelity’s investment experts believe that the recent volatile market conditions have instead increased the attractiveness of global technology stocks. For more insightful video content and market analysis articles, please follow @FidelityInternational

The technology industry is becoming increasingly differentiated,Some relatively resilient companies are beginning to stand out, and with the technology sector being one of the most enduring growth themes, this further enhances the appeal of technology stocks, but the key lies in careful screening.

Based on the following three major shifts, we believe investors should continue to invest in the global technology sector:

1. Rotation of market-leading stocks

The performance of the technology sector in recent years has been dominated by a few high-profile companies, increasing the risk of over-concentration and valuation sensitivity. This situation has started to change.Market-leading stocks are starting to become more diversified, with strong performances from tech stocks outside the U.S., including some of China’s largest technology companies.

2. Some highly sought-after sectors have become cheaper

Following earlier strong growth that drove stock prices higher,the recent market correction has led to a pullback in valuations of some leading tech stocks, creating some attractive buying opportunities.。

Meanwhile, market leadership is beginning to broaden from large U.S. growth stocks into other areas.As investors grow increasingly concerned about the disruptive impact of AI, various tech sub-sectors are evolving individually, with the gap between hardware and software stocks continuing to widen.In this environment,investors need to take a more active approach in carefully selecting global technology stocks,as performance varies across regions and sub-sectors, creating opportunities to acquire high-quality stocks at lower prices.

3. Increasing investment opportunities in technology and AI-related sectors

AI remains one of the most transformative themes in the global economy,with attractive investment opportunities no longer limited to a small group of large-cap stocks. As AI applications become widespread and investments increase,deeper layers within the ecosystem (including infrastructure, data, software, and specific industry applications) are beginning to reveal more value.。

In our view,The key to investing in technology stocks lies in identifying tomorrow's winners.Take the software industry as an example. Investors are concerned about the disruptive impact of AI, leading to indiscriminate sell-offs in software stocks. However, active stock selection may uncover companies that benefit from increased AI demand. Additionally,some hyperscale cloud service providers also present attractive investment opportunitiesas these providers help drive the adoption of AI.The Chinese technology sector also holds some potential opportunities, including leading consumer internet platforms, as well as travel platforms and gaming companies with increasing market share. The localization trend also supports analog semiconductor and application software companies.

In Europe,some global semiconductor equipment leaders are worth investing in, including companies that have developed advanced packaging technologies like hybrid bonding. As market demands for performance and efficiency continue to rise, hybrid bonding represents a field with structural growth drivers.Europe also has many attractive B2B tech companies, spanning fields such as enterprise software, payment infrastructure, and communication equipment.

Summary

We believe that The forces currently reshaping the global technology landscape will persist and form long-term structural trends, presenting investors with long-term investment opportunities, and the key lies in how investors should seize these opportunities.

While the current focus of discussion is on the winners and losers in the AI field, in fact,the technology sector still holds a wide variety of opportunities, including digital content creation and distribution as well as payments and fintech, among others.The key lies in identifying high-quality stocks with attractive valuations that possess enduring business models and long-term revenue streams, which can provide returns while also buffering downside risks when market sentiment shifts.As the leading stocks in the market broaden, investors need to be increasingly selective in their investments.

Important Notice

This material is intended for use and reference by Hong Kong residents only. Investment involves risks. This material contains general information only and does not constitute an offer or solicitation for the purchase or sale of any securities, or an invitation to participate in Fidelity's investment management services, in any jurisdiction where such distribution, offer, or solicitation would be unlawful. Prospective investors should seek independent advice.

The information provided herein is accurate only as of the date of publication. Views and forecasts may change without prior notice. Any securities mentioned (if applicable) are for informational purposes only and should not be considered as recommendations to buy or sell such securities under any circumstances.

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