Goldman Sachs remains bullish on technology stocks in the USA.

Due to concerns about the US economic recession heating up, as well as factors such as profit-taking in AI stocks, the technology stocks have temporarily paused their rising trend in recent days, with the Nasdaq falling more than 5% since September.

Investors' confidence in technology stocks seems to be waning. At this moment, Goldman Sachs' senior technology analyst Kash Rangan recently stated that to regain upward momentum for large technology stocks, two major factors need to work together: first, the continuous rate cuts by the Federal Reserve, and second, a burst of innovation, which is enough to drive profit growth of technology stocks by over 20%.

At the recent Communacopia & Technology conference held by Goldman Sachs, Rangan emphasized that for the growth rate of the technology industry to recover from 11% to 20%-30%, new innovative achievements are needed to drive it. This requires the industry to make progress in the AI field (such as adding sales and monetization to customers), especially optimistic about the potential of Microsoft and Salesforce.

Secondly, Rangan also mentioned the significant role of low interest rates:

When you combine innovation with lower interest rates, miracles happen.

For technology companies, especially AI companies, a low interest rate environment allows them to obtain loans and issue bonds at lower costs, thereby reducing research and capital costs, increasing return on investment.

Currently, investors are closely watching the Federal Reserve's monetary policy decision on September 18th, with the market generally expecting the Fed to initiate its first interest rate cut in years.

Goldman Sachs Chief Economist Jan Hatzius stated at the same conference that although the possibility of a 50 basis point cut cannot be ruled out, a 25 basis point cut is more likely. He explained that despite the U.S. making more progress in combating inflation compared to other G10 economies, the current level of the federal funds rate remains relatively high.

Wall Street News previously mentioned that Goldman Sachs analyst Toshiya Hari also expressed optimism about Nvidia stocks at the conference, despite the recent poor performance of the stock:

"Firstly, the demand for accelerated computing remains very strong. We tend to focus on mega-cap companies like Amazon, Google, Microsoft, etc., but you will see that the range of demand from enterprises is expanding, even in sovereign countries."

When asked whether the Goldman Sachs team believed Nvidia stocks were being oversold, Hari said, "Yes, we believe they are."

Editor/Lambor