Spooked by the data breach news, social media giant Facebook (FB - Free Report) was one of the worst-performing stocks on Wall Street in Monday’s trading session. This has sparked concerns over increased regulation for large tech companies, triggering a selloff in the hot and soaring technology corner of the broad stock market.

Both the S&P technology index and tech-heavy Nasdaq Composite Index witnessed the worst one-day fall since the selloff in early February, declining 2.1% and 2.5%, respectively.

What Happened?

The steep decline came following reports from New York Times and London's Observer, which revealed that data analytics firm Cambridge Analytica, which had ties to the Trump campaign, gained inappropriate access to data on more than 50 million Facebook users. This has sparked broader concerns about data privacy and security, and will likely lead to increased scrutiny over data security and a relatively heavy regulatory pressure.

As such, shares of Facebook tumbled 6.8% in Monday’s trading session, representing the worst one-day drop in nearly four years, and wiped out $36.4 billion from the company’s market value. With the slide, the stock is down 11.6% from the latest peak, signaling that it has entered correction territory.

Facebook currently has a Zacks Rank #2 (Buy) and a Growth Score of B, suggesting that it is primed for growth in the coming months. It saw solid earnings estimate revision of 58 cents for this year over the past 60 days and has an estimated growth rate of 16.72%. Revenues are also expected to grow 36.3% for this year. However, the networking giant belongs to the bottom-ranked Zacks industry (bottom 30%), which signals some pain in the near term.

Other stocks in the FAANG group, namely Amazon (AMZN - Free Report), Apple (AAPL - Free Report), Netflix (NFLX - Free Report) and Alphabet (GOOGL - Free Report), also saw terrible trading, losing 1.7%, 1.5%, 1.6% and 3.0%, respectively. Social media companies including Twitter (TWTR - Free Report) and Snap (SNAP - Free Report) dipped 1.7% and 3.5%, respectively.

Solid Sector Outlook

Despite the slide, the outlook for the sector is promising. This is especially true as the tech sector appears fully emerged from the burst of the dot-com bubble. The emergence of cutting-edge technology such as cloud computing, big data, Internet of Things, wearables, VR headsets, drones, virtual reality, and artificial intelligence as well as strong corporate earnings are acting as the key catalysts.

Additionally, the twin tailwinds of Trump’s tax reform plan and a rising interest rate scenario are pushing the stocks higher. Adding to the strength is a pickup in the economy and better job prospects that are giving a solid boost to economically sensitive growth sectors like technology, which typically perform well in a maturing economic cycle. With the global economy gathering momentum, technology companies are likely to outperform and less susceptible to interest rates or deregulation.

Top Picks

Given this, we have highlighted five stocks that are unfazed by the latest tech rout and poised to outperform in the weeks ahead:

Qualys Inc. (QLYS - Free Report) is a provider of cloud security and compliance solutions that enable organizations to identify security risks to their information technology infrastructures help protect their IT systems and applications from cyberattacks. The stock gained 0.5% on the day and has an estimated earnings growth rate of 6.72% for this year. It has a Zacks Rank #1 (Strong Buy) and a Momentum Score of B. 

VMware Inc. (VMW - Free Report) provides virtualization and cloud infrastructure solutions from the desktop to the data center in the United States and internationally. It has an estimated earnings growth of 14.64% for this fiscal year (ending Jan 2019) and was up 0.9% amid the tech sector turmoil. It has a Zacks Rank #1 and a Growth Score of B.

DXC Technology Company (DXC - Free Report) provides information technology services and solutions primarily in North America, Europe, Asia and Australia. Shares of DXC rose 1.2% on the day as the company is expected to see massive earnings growth of 153.55% for the fiscal year (ending March 2018). DXC Technology has a Zacks Rank #2 and a VGM Score of A.

IPG Photonics Corporation (IPGP - Free Report) is the world leader in high-power fiber lasers, fiber amplifiers, and diode lasers used in various applications. The stock added 0.2% on the day and has an estimated earnings growth rate of 15.29% for this year. It has a Zacks Rank #2 and a Momentum Score of B.

Entegris, Inc. (ENTG - Free Report) is a leading provider of materials management solutions to the microelectronics industry including, in particular, the semiconductor manufacturing and disk manufacturing markets. The stock is expected to generate earnings growth of 21.53% for this year and saw a 1.1% rise in its share price amid the Facebook-led tech sell-off. It has a Zacks Rank #1 and a Growth Score of B.