Why Telecoms Like AT&T And Verizon Are Trouncing Tech Giants

The telecoms are calling investors back, with AT&T stock and Verizon stock connecting investors to returns that are outperforming even those from major tech stocks.

Both AT&T stock and Verizon stock saw positive gains recently, with AT&T up 16.6% and Verizon stock up 25.7% year-to-date. In contrast, tech giants stumbled, with Meta Platforms stock essentially flat and Google parent Alphabet down 3.9% over the same period.

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Market rotation away from more growth-oriented stocks and into value-driven and defensive sectors could be the reason why, David Keller, president and chief strategist at Sierra Alpha Research, told Investor’s Business Daily’s “Investing with IBD” podcast.

Audio Version Of Podcast

What’s Driving Market Rotation

Keller points to weakness in technology, communications and financials even as other sectors perform well or even outperform benchmarks. “What’s happening is a lot of movement underneath the hood with the AI trade struggling,” Keller said.

This leadership rotation in stocks means “what’s working is just not what we typically think of as bull market type stocks,” Keller said. The rotation is driven by institutional investors who help set the tone for markets. Because institutional investors have a mandate to stay invested in markets, they are shifting into defensive, low-volatility positions meant to protect gains.

These safer bets, in other words, are more insulated when major markets move lower while still generating returns.

AT&T Stock And Verizon Stock’s Valuable Lessons For Investors

AT&T stock saw a recent 123-day cup-with-handle pattern form with a possible 29.79 entry, according to MarketSurge pattern recognition. While the chart pattern is lopsided and saw a dramatic rise when forming the right side of its base, the stock remains comfortably above its 50-day moving average and 200-day moving averages.

Verizon stock, meanwhile, broke out of a lengthy, 227-day consolidation on Feb. 10 when shares passed the 47.35 entry. The stock is trading above its pivot point and remains well above most of its moving averages.

Keller says the shift provides a valuable lesson for newer investors. “In their limited experience, bull markets are driven by growth stocks,” Keller said. “They haven’t seen a bull market where it’s not growth leading.”

“The move to defensives has been, in some cases, very sudden,” he said.

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