Technology and Communication Sectors Update

Current Market Performance

Technology and communication services are the best-performing sectors this week.
Despite a recent rebound, these sectors are still significantly down for the month and year.
MAG 7 companies remain 18% or more off recent highs.

Safety in Software:
- Software considered a "safety blanket" amidst market volatility.
- Hyperscale deals and AI projects are mostly stable, with only 5-10% facing delays.
- Positive outlook for companies like Microsoft, Alphabet, Amazon (AWS), and Palantir.
Supply Chain Challenges:
- Significant disruptions described as "Armageddon" in the supply chain.
- Raw material orders and ripple effects are causing visibility issues.
- Software and cyber security are deemed safer investments currently.

AI Revolution:
- AI remains a key focus despite tariffs and economic uncertainties.
- Major tech companies are unlikely to reduce investment in AI due to competitive pressures.
Enterprise Spending:
- Conversations with IBM reveal a shift in enterprise spending behavior.
- AI allows companies to save costs, changing traditional spending dynamics during slowdowns.
- Ongoing projects, especially large-scale ones, continue despite economic pressures.

Hyperscalers and big tech are expected to continue investing in AI and related technologies.
Upcoming earnings season might focus on companies reaffirming their commitment to tech investments rather than reducing them.
Software and cyber security anticipated to be top-performing areas within tech.

Upcoming CNBC Pro event on June 12th at the New York Stock Exchange, featuring a diverse lineup, promises insights into the current tech landscape.