According to Julian Emanuel of Evercore ISI, mega-cap technology stocks are poised to regain investor favor following the recent weeks of selling pressure. The sell-off has dragged down shares of some of the sector's largest companies by more than 10%.

"You are going to see good earnings," stated Emanuel, the chief equity and quant strategist at Evercore. He noted that earnings drove a "powerful rally" in April and May and will once again become the "sole arbiter of truth."

Chip stocks led a sharp decline in South Korea's market, with SK hynix and Samsung Electronics both falling over 12% as investors worried the prior rally was overextended. This pressured U.S. tech shares at Tuesday's open. The Nasdaq 100 index had already fallen on Monday, nearly erasing its gains for June. The index rose 10% in April and 16% in May.

Alphabet, the parent of Google, fell 5% on Monday, while Amazon dropped 4.8%. These two so-called "Magnificent Seven" tech companies have each fallen more than 13% and 15%, respectively, from their recent peaks in May. Microsoft is down nearly 20% this month.

"The market may have to go through a little more back and forth, a little more volatility, a little more negativity," Emanuel said.

Ahead of Micron Technology's earnings report on Wednesday, chip stocks remain a bright spot within the tech sector. Its shares rose 6.8% on Monday, boosted by a strategic agreement with Anthropic PBC, bringing its year-to-date gain to over 300%. However, the stock was impacted by the broader industry decline on Tuesday. Industry research suggests Micron's fiscal third-quarter revenue could exceed expectations by 18%, driven by rising chip prices.

"Chip stocks have done a lot of the heavy lifting," Emanuel stated. "You need a fresh look at the 'Magnificent Seven.' We think that is gradually developing."

"Looking back at this bull market, which is now nearly three years old, you see periods where earnings and stock prices have essentially converged," he said. "We think that's the period these large-cap stocks are in right now."