Highlights

Amid a tech sell-off triggered by warnings of an AI bubble, Nasdaq and semiconductor indices have tested their monthly lines. Yet, driven by earnings performance outperforming expectations and upward revision in capital expenditure, the growth trend for U.S. stocks remains intact. Despite high valuations, investing in Nasdaq 100 ETFs is recommended to harness long-term growth in tech giants. A dollar-cost averaging strategy can help mitigate volatility risks while capturing enduring growth potential of the tech sector.

Sentiment Analysis

• Current sentiment towards U.S. tech stocks appears cautiously optimistic, based on the recommended strategies and opportunities for investor engagement.
• Mixed market reactions reflect both concern over AI developments and optimism about underlying tech growth trends.
• Strategic long-term investment in specific Nasdaq 100 ETFs can leverage the sector's resilience and future growth.

Article Text

Recent sell-offs in the U.S. tech sector, sparked by institutional warnings of an AI bubble, have seen the Nasdaq and semiconductor indices retesting their monthly trends. However, CTBC Investments suggests that the fundamental growth trajectory of U.S. stocks remains robust, buoyed by earnings exceeding forecasts and continuous increases in capital expenditure. These short-term pullbacks present investors with strategic entry points, emphasizing the long-term viability of well-selected tech stock investments, particularly through Nasdaq 100 index ETFs.

Despite current high valuations, tech sector stocks are not considered overly costly relative to the broader S&P 500 index. A suggested approach is to invest in ETFs tracking the Nasdaq 100 index, employing a systematic, periodic investment strategy to reduce volatility exposure. This strategy captures long-term growth in major tech companies, such as Microsoft, Google, Facebook, and Amazon, whose capital expenditures indicate sustained investment in AI and cloud technologies.

CTBC highlights that substantial investments are forecast, with Amazon's capital expenditure set to rise from $50 billion in the first half to an anticipated $60 billion in the second half year. Observing diversification beyond U.S. borders, 55% of tech sector revenue comes from non-U.S. markets, offering investors a broadened spectrum of opportunities and risk distribution.

The Nasdaq index (NDX), showcasing a price-to-earnings ratio of around 27.1 times, slightly towers above its five-year average of 25.6 times, yet sits comfortably within one standard deviation, unlike the more stretched S&P 500 index. Tech valuations, while elevated, remain justifiable and strategic.

Exploring U.S. stock ETFs listed in Taiwan, CTBC recommends ETFs like Fubon Nasdaq (00662-TW) and CTBC Nasdaq (009800-TW) for their cost-effectiveness and growth potential. This is particularly true given that Nasdaq 100's primary sectors are information technology (52%), communication services (15%), and consumer discretionary (13%), which are pivotal to propelling long-term U.S. stock growth. Key enterprises such as Apple, Microsoft, and NVIDIA signify high growth and industry leadership.

For moderate-risk investors considering factors like more accessible pricing and lower transaction cost variability, CTBC suggests the more affordable 009800 fund. Priced at approximately $10,000 per unit, the fund allows for cost-effective, scalable investment through regular contributions. This strategy helps smooth cost fluctuations and mitigate short-term volatility concerns, fostering a balanced entry into the U.S. stock market.

Key Insights Table