In tech we trust?

Assessing the recent weakness in technology stocks.

The stock market has looked wobbly this month.

The S&P 500 has declined more than 4% in September, putting it on track for its worst monthly slump this year.

The tech-heavy NASDAQ 100 is struggling even more and has shed roughly 7% in value since the end of July.

The market worry has been well publicized — investors coming to grips with the idea of higher interest rates for longer and the recessionary fears associated with that

While bulls had argued earnings would trough after a steady decline over the past year, now some are wondering if current profit estimates are too high.

Amidst the fresh uncertainty, tech stocks have been an easy target.

Consider the so-called “magnificent seven.” Fueled, in part, by AI excitement, Apple, Microsoft, Tesla, Nvidia, Amazon, Alphabet and Meta all outpaced the NASDAQ 100’s 44% advance during the first seven months of the year.

I interview equity strategists and money managers daily on my television programs and while many are arguing for more defense in portfolios, some of the sharpest minds have been reluctant to give up on tech.

And the reason is simple — you won’t find growth without it.

“During cycles, when overall spending is falling and people are worried about unemployment, that often is a time to go ahead and buy more tech,” JoAnne Feeney, partner and portfolio manager at Advisors Capital Management, told me in an interview this week.

“Because when you own technology stocks, it’s for the growth of your portfolio over the long run.”

“It’s the area of the economy that can deliver high single-digit growth or even double-digit growth over a number of years. And that growth in earnings translates into growth in the value of those companies. And so even when there’s a recession potentially coming, it’s the technology companies that can help your portfolio continue to grow because they often sell into markets that are evolving — that are changing in a structural way that will allow those company’s sales to get bigger.” She cited Amazon’s fast-growing advertising business as an example. Feeney, to her credit, recommended Broadcom on my program well before the stock’s run-up. She remains upbeat on the company, which sells chips to Apple, but is also capitalizing on the AI boom.

And she notes the company has diversified into other growth areas, such as cybersecurity. Plus, it pays a dividend. She also likes Microsoft.

“One of the names we’ve been adding to our portfolio is Adobe,” Victoria Fernandez, chief market strategist at Crossmark Global Investments, told me this week.

"This is not a cheap stock, but you are looking at a company with a really strong balance sheet. You’re looking at a company that is benefiting from the AI transition and is anticipating double digit growth going forward. And we’ve also added to our Apple holdings. Apple has come down a bit, so if you don’t have a position, you can take baby steps and buy some of these names as they pull back.”

None of this is to say these stocks won’t stumble if the economy hits a rough patch.

But as JoAnne Feeney put it, “these companies are part of the future of the global economy.”