Buy Tech Dip But Stay Diversified, Says Fundstrat

Is It Time to Buy the Tech Dip?

Have you noticed the sudden swings in the stock market lately? If you have been keeping an eye on tech stocks, you might have seen a fairly sharp pullback recently. However, Mark Newton, global head of technical strategy at research firm Fundstrat, believes this dip could offer a buying opportunity for long-term investors—provided they stay diversified.

Speaking in an interview with CNBC, Newton suggested that investors should consider buying into tech weakness while maintaining a balanced portfolio. His advice comes at a time when market indicators are giving somewhat mixed signals.

For instance, the market-cap-weighted headline S&P 500 index set a new record high just seven trading days prior to the interview. At the same time, the equal-weight S&P 500—which assigns every single company the exact same percentage weight—fell about 6%. This divergence highlights how heavily a small group of large technology companies influences overall index performance.

Understanding Market Rotation: From Energy to Healthcare

According to Newton, market trends in 2026 have been largely defined by sector rotation. Money has been moving actively from one economic sector to another rather than lifting all stocks simultaneously.

This wave of rotation initially started with a massive energy sector rally of almost 40%. After energy had its run, capital shifted heavily into technology stocks. Most recently, healthcare stocks quietly surged to reach brand-new record highs.

Newton noted that volatility across multiple asset classes has picked up over the past month. Even though tech stocks dropped sharply last week, he pointed out that the sector has actually given back very little of its strong September gains. Still, because market momentum shifts quickly between industries, diversification remains crucial to managing portfolio risk.

AI Infrastructure Providers Face High Borrowing Costs

A key example of recent tech market nervousness is CoreWeave, a prominent artificial intelligence cloud provider. CoreWeave's stock plummeted by 15% at one point before recovering and turning positive during a Thursday trading session.

Despite that quick intraday recovery, investors remain concerned about how the company will handle rising bond yields. Building out massive AI computing power requires substantial debt financing, and higher interest rates make servicing that debt much more expensive.

Meanwhile, key hardware and memory stocks have also stayed weak. Major industry names including Seagate Technology, Western Digital, Intel, and South Korean chipmaker SK Hynix have all struggled to build positive momentum.

Can AI Profits Keep Pace With High Debt Yields?

Steve Sosnick, chief strategist at brokerage firm Interactive Brokers, offered a cautious perspective on these market dynamics. He explained that strong belief in massive future AI returns has helped stocks push through rising government bond yields.

Sosnick noted that if investors believe the AI payout is virtually limitless, paying high financing costs—whether 9% or even up to 20%—might not seem like a barrier at first. However, he sees CoreWeave's price volatility as an early signal that doubts about those huge projected returns could start taking hold.

we are all heavily invested in AI whether we want to be or not.

Sosnick pointed out an important structural factor for passive index investors. Based on his estimates, traditional S&P 500 index funds now allocate 45% or more of their total weighting to technology stocks.

This high concentration means index returns are tightly linked to AI profits outpacing elevated corporate borrowing costs. If technology stocks experience sustained selling, automatic index fund and ETF liquidations could follow, potentially accelerating downside price momentum.

Evaluating Potential Market Outcomes

When deciding how to position a portfolio during tech dips, investors should consider a range of potential scenarios rather than assuming continuous upward movement:

• Bullish Scenario: If AI cloud and hardware companies successfully monetize their infrastructure while borrowing costs stabilize, tech valuations could regain upward momentum.
• Bearish Scenario: If elevated interest rates continue to weigh on balance sheets while AI revenues fall short of high market expectations, tech stocks and broad index funds could face further price pullbacks.
• Neutral Scenario: Capital may continue rotating between sectors like healthcare, energy, and tech, causing individual sectors to fluctuate while overall market indices move sideways.

Past performance of market indices or digital assets is not a guarantee of future results. Always conduct thorough research and consider your risk tolerance before making financial decisions.