Time for a Tech Sector Reboot, Wall Street Pros Say
Can Techs Lead the Market?
Specific tech names and fundamentals aside, what has underperformed may simply fare better in the future. And that could help tech investors here.
First-quarter sector laggards—tech and materials—are poised to outperform in the second quarter, according to Thomas Lee, JP Morgan's Chief U.S. Equity Strategist, in a research note. "There is a curious and historically reliable seasonality that favors 1Q laggards to lead in 2Q (materials and technology, but cyclicals broadly)," he wrote.
Additionally, better earnings across the board and a pick-up in economic growth could eventually feed through to higher spending on tech gadgets and services. And that uptick could make investors more comfortable owning cyclical sectors.
Cyclicals like tech to do better and push the broader market higher, Jim McCaughan of Principal Global Investors, told CNBC. Several macro trends are improving — to tech's benefit.
"It's a matter of low energy costs by international standards, innovation and manufacturing and the housing market turning," McCaughan said. "I think all of those things tend to point to domestics and cyclicals doing better. So I like manufacturing, technology and small and mid-caps that are very dependent on the U.S. economy."
(Read More: Strategists See Technology Gains Continuing)
—By CNBC's Justin Menza. Follow him on Twitter
Nomura intends to seek or receive compensation for investment banking services from Microsoft in the next three months.
Dan Niles has a personal and professional investment (either long or short) in MXIM, RFMD, QCOM. His firm does not own more than 2% of the shares outstanding.
MSFT is a UBS investment banking client, and the analyst, a member of his team or his household has a long position in Microsoft shares.