Tech Stocks Drop Ahead of FOMC but This Top Analyst Says It's Still Not Time to Buy

The Nasdaq futures are down 1% in premarket Monday in anticipation the Fed will deliver the third consecutive 75bps rate hike on Wednesday.

Tesla (NASDAQ: TSLA) shares are down almost 1.5%, while Amazon (NASDAQ: AMZN) and Apple (NASDAQ: AAPL) are both down 1%.

Bernstein analyst Tony Sacconaghi sees “marginally more expensive” tech stocks since mid-year as the tech-to-market premium stands at 33%, compared to its historical average of 25%.

“Tech’s 5-year growth expectations relative to the market ex tech are below historical averages… which we view as a positive,” Sacconaghi said in a client note.

However, the tech sector is “not quite as attractively valued on a relative basis vs. three months ago.”

“We continue to recommend a market weight in tech and a largely balanced barbell of growth and value names; and encourage investors to avoid very expensive, low quality names, which we believe are most vulnerable in any further market pullback,” the analyst added.

Some of the stocks that Sacconaghi is telling clients to avoid include the names like Atlassian (NASDAQ: TEAM), Zscaler (NASDAQ: ZS), Palo Alto Networks (NASDAQ: PANW), Palantir (NASDAQ: PLTR), Roblox (NYSE: RBLX), etc.

By Senad Karaahmetovic

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