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Tech and Communication Sector Insights

Apr 26, 2025

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.

Insights from Wed Bush Stan Ives

  • 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 and Enterprise Spending

  • 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.

Future Expectations

  • 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.

Additional Notes

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