Rotation Away from Big Tech Continues, Deutsche Bank Predicts Strong Momentum

The rotation away from Big Tech and into small caps may continue for the foreseeable future, according to a report from Deutsche Bank. Last week saw a significant shift in investor sentiment, with a move away from mega-cap tech companies towards smaller companies in different sectors.

Deutsche Bank’s strategist Parag Thatte believes that the market is still overly optimistic about the growth potential of the tech sector and other high-growth areas. The note to clients highlighted sharp rotations in positioning and flows away from megacap growth and tech stocks towards small caps. According to the bank, this trend has the potential to continue in the medium term.

While overall equity positioning remains elevated, the report suggests that the recent movements away from Big Tech have “plenty of legs to run.” Thatte emphasized that although megacap growth and tech stocks have been driving the market with strong earnings growth and upgrades, there may be a slowdown as growth aligns with historical trend rates.

The shift in investor sentiment away from Big Tech and into small caps could have significant implications for the broader market moving forward. Investors will be closely watching how this rotation plays out and the impact it has on various sectors and market indices. As always, market participants should stay informed about these developments to navigate the ever-changing landscape of the financial markets.