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HOLT: Beyond the hype 鈥� 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鈥檚 outperformance.

20 Mar 2025
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US Tech鈥檚 outperformance has been underpinned by the sector鈥檚 value creation 鈥� 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鈥檚 attractive quality, stability and growth profile.

5 key takeaways

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  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鈥檚 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 鈥� Can US tech's dominance endure?

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