Summary

• Russ Koesterich explains how tech’s resurgence signals shifting economic expectations and strong earnings, supported by historically reasonable valuations.
• As expectations have shifted toward slower growth, higher inflation, and higher rates, investors have rotated back to sectors like large-cap technology and semiconductors, capable of delivering durable earnings in a tougher macro environment.
• Despite the sharp rebound, tech valuations appear justified by strong profitability and elevated return-on-equity, suggesting continued leadership is possible.

Stocks have surged to new highs, but leadership has shifted. Since the start of the Iran war, the U.S. tech sector has advanced roughly 33%*, while semiconductor companies have gained more than 45%*, both easily outperforming the broader market.