- Kevin O'Leary says tech stocks are only in the "third inning" of growth.
- The Shark Tank star said he continues to buy tech names despite the recent pullback.
- O'Leary also called the value rotation a move into "broken business models."
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Kevin O'Leary said he's picking up more shares in tech names despite the recent rotation trade hurting returns.
The Shark Tank star argued tech stocks are only in the "third inning" of a long growth story in an interview with CNBC on Monday.
"Go look at the chart of Amazon over the last 17 years…up to 38% corrections all the way through…When tech has a massive correction or the software sector gets soft, if you don't believe the growth is still there then, of course, you sell into it, but I don't think the story is over. We're not even in the third inning, so I continue to buy," O'Leary said.
The Canadian businessman also said he doesn't like value plays because the sector is filled with "broken business models."
O'Leary criticized airlines, hotel chains, commercial real estate, and other "value" sector plays, arguing that without the "$1.9 trillion sauce" of the recently-passed relief bill, they wouldn't be attracting investors.
O'Leary blasted the COVID-19 relief package signed into law by President Biden, saying that he read it and there is "a lot of waste in there." O'Leary claimed that "half of this money is going into bitcoin and the stock market."
"It was supposed to feed people and pay their rent," O'Leary said. This only shows how "extreme we've gotten."
O'Leary's claim that tech stocks are investors' best bet runs contrary a recent move into value stocks from institutional investors.
JPMorgan analysts, led by Mislav Matejka, said in a note on Monday they see value plays continuing "to look very appealing."
So far in 2021, the analysts have been correct. The MSCI Value index has jumped 8.7% this year, while the MSCI Growth index fell 0.04% in the same period.
Still, tech stocks have been the market leaders for over a decade, and big names continue to support the sector.
Hedge fund manager Cathie Wood has repeatedly said that she's finding "great buying opportunities" amid the rotation trade. The ARK Invest founder has backed up her words lately as well with big purchases of Roblox, Palantir, and Tesla amid the tech sell-off.