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A closer look at our US Tech OW allocation - April 16
- Tech stocks remain the largest sector overweight on our asset allocation engine. Even after the rapid rally, cyclical outlook for technology remains bullish, powered by the still capital-scarce semiconductor industry.
- Capital cycle scores remain very good for NVDA for example, but has started to deteriorate meaningfully for the hyperscalers who are funding the AI capex.
- Equity market agrees with the outlook for semis, with SMH being the first to make a new all-time high during the April recovery. Valuations have reset lower due to surging earnings estimates.
- For macro implications, main concern is that semiconductor cycle is occuring against the inflation impulse from the Iran conflict. We also have the potential ingredients for another major bubble to develop in 2H26.
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