HOLT

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

Tech's outperformance has been supported by value creation. While there are risks, the sector offers a number of quality/growth firms at reasonable multiples. Discover the reasons supporting Tech’s outperformance.

20 Mar 2025

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

Nearly half of the market cap in the US is Tech centric now
There are fundamental drivers supporting Tech's outperformance
Potential overinvestment in AI has parallels in history
Valuation remains elevated, but is not extreme compared to history
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.