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US Tech’s outperformance has been underpinned by the sector’s value creation – not just multiple expansion. That said, elevated valuation levels and overinvestment in AI are risks. We believe a selective approach to Tech has merit given the sector’s attractive quality, stability and growth profile.

5 key takeaways

  1. Nearly half of the market cap in the US is Tech centric now
  2. There are fundamental drivers supporting Tech's outperformance
  3. Potential overinvestment in AI has parallels in history
  4. Valuation remains elevated, but is not extreme compared to history
  5. Even against a backdrop of heightened risks, quality growth opportunities remain

What are the fundamental reasons supporting Tech’s outperformance?

  • Improving CFROI Levels
  • High levels of reinvestment
  • Proliferation of competitive moats
  • Fortified balance sheets to capitalize on growth

For the Global Research Disclaimer and HOLT Disclaimer please see www.ubs.com/disclosures.

HOLT: Beyond the hype – Can US tech's dominance endure?

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