The tech sector has had a bumpy ride since June 9 when the stocks took a dip as investors worried about the year's steep rise in mega-cap names such as Apple (AAPL) - Get Report and Alphabet (GOOGL) - Get Report .
But Loup Ventures founder and famed Apple analyst Gene Munster told TheStreet on Monday afternoon that it's just a normal pullback in the tech sector, rather than a correction. "It's a natural pullback given the outperformance of FAANG year-to-date," he said, referring to tech leaders Facebook (FB) - Get Report , Apple, Amazon (AMZN) - Get Report , Netflix (NFLX) - Get Report and Alphabet (GOOGL) - Get Report . "It's natural, healthy profit-taking." Indeed, tech stocks rebounded about 1.5% by Monday's close, although they were trading flat to slightly down on Tuesday.
Some investors are jumping on the tech train on this unexpected dip and Munster said that's a good strategy if you're thinking long term. "Tech stocks could be bumpy in the next month or two," he warned. "But longer term, yes, this is a good chance to buy."
Munster said that Tesla (TSLA) - Get Report is his favorite pick for tech stocks that have the best long term potential. The electric car company could become the next Amazon (AMZN) - Get Report , Munster recently said on CNBC. "Tesla is a controversial story," he said. "People don't understand what this company's mission statement is."
People see it as just an electric car company, just like Amazon was once seen as a company that just sold books, Munster said in the interview. However, Tesla has a much broader goal to advance the worldwide adoption of renewable energy. "When you start thinking about that, you can see them grabbing market cap from energy companies which are some of the largest market-cap companies," he explained.
Tesla was trading up 1.22% to $374.20 in late morning trading on Tuesday after Bloomberg reported late Monday that Tesla may open a new production facility in China, a move that would help it avoid tariffs. The company made headlines earlier in June when CEO Elon Musk pulled out of two of President Donald Trump's advisory councils after Trump pulled out of the Paris accord on climate change.
While the tech sector saw a bit of a recovery on Monday, it's not in the clear yet. Apple is trading down slightly to $145.20 in early afternoon trading on Tuesday, and Netflix (NFLX) - Get Report is trading down about 1% to $151.92. The rest of the FAANG members, including Facebook, Amazon and Google were all trading flat to slightly down.
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