Tech Has Snapped Back Five Times in 30 Months, and Deutsche Bank Expects a Sixth

Technology stocks have a recurring habit: they fall hard, then recover in a sharp V-shape. Over the past 30 months the sector has done this five times. Now Deutsche Bank is arguing that another rebound is taking shape, and that investors should put tech back at the center of their portfolios.

The bank's case rests less on headlines than on positioning. Equity investors have pulled back from tech in a way that matches much slower earnings growth than the sector is actually producing. When a group of stocks falls out of favor while its profits keep coming in, the gap between sentiment and fundamentals can start to look like an opportunity rather than a warning.

That reasoning is why Deutsche Bank has returned to an overweight view. In its assessment, the risk-reward balance now favors a sector that has suddenly gone out of fashion. When expectations are already depressed, the downside has less room to run, while a shift in sentiment can lift prices quickly. The recent pattern of sharp drops followed by fast recoveries is the backdrop for that argument.

Still, a V-shaped recovery is not a sure thing. Investors who buy after a steep decline can get caught if the slide turns into something longer and deeper. A forecast from one bank is also only one view among many, and tech is not a single trade. Earnings quality, valuation and exposure to AI spending will likely separate the companies that bounce back from those that stay under pressure.

For now, the message from Deutsche Bank is straightforward. Positioning is cautious, earnings are running ahead of the mood, and the bank expects that gap to close. How quickly it closes, and which stocks lead the way, will be the question for investors in the months ahead.