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US TECH SHARES SELLING OFF BUT EARNINGS ESTIMATES RISING
As U.S. technology shares .SPLRCT sell off on Tuesday, investors are focusing again on massive AI spending and steep valuations in the sector.

But earnings estimates for the S&P 500 technology sector remain strong heading into the next profit reporting period, which unofficially begins in July.
"From an earnings revision perspective, technology remains one of the strongest sectors we track," says Nick Raich, CEO of The Earnings Scout.
He writes on Tuesday that "recent price weakness has occurred despite continued improvement in EPS expectations."
As of last Thursday, S&P 500 technology sector .SPLRCT earnings are expected to increase 61.4% in the second quarter compared with a year ago. That's is the highest estimated earnings growth for any sector for the quarter after energy .SPNY, which is seen growing 117.2% year over year, according to data from Tajinder Dhillon, head of earnings research at LSEG.
What's more, the second-quarter tech sector earnings growth estimate is up from 50.2% at the start of April. Earnings growth for the entire S&P 500 in the second quarter is now estimated at 22.9%, up from 19.2% at the start of April, LSEG data shows.
"Until we begin to see a meaningful deterioration in earnings expectations, we believe the fundamental backdrop for AI, technology, and equities remains favorable, and that recent pullbacks are creating opportunity rather than signaling the end of the rally," Raich writes.
Investors are likely to pay close attention to quarterly results from FedEx Corp FDX.N when it reports on Tuesday after the bell.

Micron Technology's MU.O report late on Wednesday will also be in focus.

Shares of Micron, which is among the best performers on the S&P 500 this year, are down 11.1% on Tuesday, while the technology sector is down 2.8% on the day.
The S&P 500's last earnings season saw the biggest earnings growth since the fourth quarter of 2021, Dhillon says. LSEG data showed year-over-year growth for the first quarter was 29.3%.

S&P 500 earnings growth in the fourth quarter of 2021 was 32.1%.

(Caroline Valetkevitch)

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