Moving on from Big Tech — What’s Next?
We’re exploring alternative investment themes and not rushing back into the market. The repricing of Big Tech, whether abrupt or gradual, is inevitable, so we’re stepping back for the time being.
Importantly, Big Tech overvaluation represents a narrow sector risk rather than a broad market threat. A sudden correction might drop the S&P 500 and NASDAQ significantly, affecting sentiment across risk assets. Yet such a decline would likely remain confined to a handful of large-cap tech firms.
Big Tech overvaluation is a specific risk, not a universal equity market risk.
Meanwhile, the U.S. economy remains stable. Corporate earnings have beaten expectations, showing an average growth of 12.5% versus a consensus of 7.9%. Interest rates are easing, quantitative tightening is ending, tariffs have faded, and inflation continues to moderate.
- Economic growth remains solid.
- Rates are moving lower, and QT’s end acts as an additional cut.
- Tariff tensions have subsided.
- Inflation trends remain favorable.
Moreover, not every stock is overvalued. Even within the so-called Magnificent 6, valuations vary, and beyond them lies a broader set of roughly 30 promising AI-related chip, cloud, and tech companies that merit individual analysis rather than blanket comparison to Nvidia.
Within the Magnificent 6, Nvidia now stands out as the most overvalued Big Tech, having recently jumped 20%.
Author’s Summary
The market is shifting beyond Big Tech, as investors weigh fresh opportunities amid easing rates, moderating inflation, and strong earnings while recognizing concentrated overvaluation risks.