The tech stock sell-off does not mean the end of the bull market. Wall Street strategists: fundamentals remain strong, and a pullback may be a buying opportunity.

Title context: The tech stock sell-off does not mean the end of the bull market. Wall Street strategists: fundamentals remain strong, and a pullback may be a buying opportunity. Text: The U.S. tech sector has recently faced sustained selling pressure, with artificial intelligence (AI)-related stocks under particular strain. However, Matt Orton, chief market strategist at Raymond James Investment Management, believes this round of adjustment is more like a process of investors reassessing tech stock valuations and growth expectations rather than a signal that the market is about to experience a full-scale crash. Although tech stocks face short-term pressure, the sector's fundamentals remain strong, and a stock price pullback may instead create buying opportunities for investors. In an interview, Orton said the current decline in tech stocks is indeed painful for investors, but the problem lies more in previously overly high market expectations and overly concentrated fund positioning rather than a fundamental change in companies' long-term growth prospects. He cited Alphabet Inc. Class C parent company Alphabet (GOOGL.US, GOOG.US) as an example, noting that although the company's cloud computing business continues to grow, its latest financial report still fell short of investors' previously high expectations, putting pressure on its stock price. As tech giants continue to expand AI infrastructure construction, meeting growing computing power demand requires huge capital investment, and the market is currently reassessing the impact of these expenditures on corporate earnings and cash flow. Orton said: "Our investment strategy this year has been to avoid chasing highs and instead look for opportunities when the market falls." Regarding the issue of deteriorating free cash flow at tech giants, which has drawn intense market attention recently, Orton is relatively optimistic. He noted that Amazon.com, Inc.'s (AMZN.US) free cash flow over the past 12 months has fallen to negative US$42 billion, but he believes that negative free cash flow at such companies due to large-scale investment is likely only temporary. "Overall, I can accept these companies temporarily having negative free cash flow because this is just a transitional phase." Orton specifically mentioned Microsoft Corporation (MSFT.US), believing the company has performed outstandingly in controlling spending and maintaining cash flow. Microsoft Corporation has maintained financial discipline through measures such as adjusting employee headcount and is not expected to fall into negative free cash flow like some peers. At the same time, Orton believes another major problem currently facing tech stocks is that investors' performance requirements have become so high that they are almost difficult to satisfy. He pointed out that among AI tech companies that reported better-than-expected results, only about 25% saw their stock prices rise after the earnings release, while another roughly 25% actually saw their stock prices fall by more than 5%. This means that even if companies deliver financial reports better than market expectations, they may not necessarily gain investor recognition. The semiconductor industry is facing the same situation. Orton said some chip companies not only announced strong financial reports with results exceeding analyst expectations, and order demand visibility has extended to 2029 or even 2030, but their stock prices still fell. In his view, this further shows that the current adjustment in tech stocks is not entirely caused by deteriorating fundamentals, but rather that the market is digesting previously excessive growth expectations and valuation levels. It is worth noting that despite pressure on tech stocks, Orton is encouraged by the trend of the U.S. stock market's upward momentum gradually spreading to other industries. He pointed out that the healthcare sector has performed strongly recently, with financial reports from pharmaceutical companies such as Eli Lilly (LLY.US) showing good growth momentum. In addition, consumer-related industries such as cruise lines have also released positive signals, indicating that investment opportunities outside tech stocks still exist in the market. However, Orton does not believe all traditional defensive sectors are attractive. He pointed out that although industries such as consumer staples and utilities are usually regarded as safe-haven choices during market turbulence, they are currently not attractive enough due to slower growth rates. He emphasized that although improving performance in other industries helps broaden the foundation of the U.S. stock market's gains, large tech companies remain an important force driving the overall market higher. "Ultimately, these market leaders and tech stocks still need to play their role in order to push the broader market further higher."