As technology giants have declined in 2025, underperforming the market on a year-to-date basis, this analyst says that the slide could be a buying opportunity anticipating a technical bounce back, however, he also highlights fundamental concerns for the longer-term.

What Happened: Based on his proprietary models and data analytics tool, Dan Niles, the founder and portfolio manager of Niles Investment Management, said that the technology stocks are getting to levels where he would pick up some of the names.

“I've been sort of waiting for a tech side where I thought they were overvalued, and now they've kind of come back in as some of these fears get discounted in the market,” he said in an X post.

However, he added that this was in the “anticipation of a near-term statistically likely technical bounce only,” whereas he had different fundamental and longer-term views. Niles excluded all of the Magnificent 7 tech giants from his top five stock picks for 2025, highlighting the disappointing first-quarter earnings outlook as a major reason for it.

“The issue with the S&P is investors are falling out of love with U.S. technology stocks because estimates are going down and valuations are high,” he said.

Niles’ top concerns included:

• Political uncertainty: Potential impact of Trump’s policies on inflation, economic growth, and the Federal Reserve’s actions.
• Overvalued assets: Current market valuations are too high.
• AI investment pause: A slowdown in AI-related capital expenditures as the market absorbs recent investments.

See Also: Trump Seeks To End CHIPS Act: Who Stands To Lose? Here’s A List Of Beneficiaries That Could Be Affected

Why It Matters: The ‘Magnificent 7’ tech giants have fallen from grace in 2025. None of these former market leaders rank among the top 50 performing stocks in the S&P 500 this year, whereas only Meta Platforms Inc. has outperformed the S&P 500 index.

However, according to a Charles Schwab note this isn’t bad news for stock pickers. Over the last year, only 22% of the constituents in the S&P 500 outperformed the index, whereas over the last month, 50% of the stocks were outperforming the index.

Similarly, Niles added that tariffs imposed by President Donald Trump will “sort themselves out” because no foreign country wants to lose access to the U.S. consumers, which are about one sixth of global GDP. “Don't forget during Trump's first term, the S&P CAGR was 14% with tariff uncertainty then as well,” he said.

Lastly, quoting Charles Darwin, Niles added that forces of nature, “adaptable to change,” have the highest chance at survival.

Price Action: The SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust ETF (NASDAQ:QQQ), which track the S&P 500 index and Nasdaq 100 index, respectively, fell on Tuesday. The SPY declined 1.18% to $576.86, and the QQQ dropped 0.30% to $495.55, according to Benzinga Pro data.

On Wednesday, the futures of Dow Jones were up 0.61%, S&P 500 traded 0.70% higher, whereas Nasdaq 100 futures advanced by 0.84%.

Read Next:

• Mark Cuban Supports Trump’s New ‘Gold Card’ Scheme If Sold To Corporations For Employee Citizenship: Here’re The Listed-Companies With Most Number Of Immigrants

Photo courtesy: Shutterstock