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1. Market Overview & Structure of the Tech Rally

  • 1. Market Overview & Structure of the Tech Rally
  • 2. Q1 Capital Expenditure Revisions & Supply Chain Dynamics
  • 3. The Software Sector: Dispersion and Monetization Debates
  • 4. Semiconductor Valuations: Tracking the 1999 Parallel
  • 5. Tactical Sector Idea: Under-the-Radar Long in US Internet
  • 6. June Macro Catalysts & The Neutralization of Interest Rates

On this page

  • 1. Market Overview & Structure of the Tech Rally
  • 2. Q1 Capital Expenditure Revisions & Supply Chain Dynamics
  • 3. The Software Sector: Dispersion and Monetization Debates
  • 4. Semiconductor Valuations: Tracking the 1999 Parallel
  • 5. Tactical Sector Idea: Under-the-Radar Long in US Internet
  • 6. June Macro Catalysts & The Neutralization of Interest Rates
Equity/May 29, 2026/4 min read/youtu.be

Can the Tech Surge Continue? | 29 May 2026 | The Markets

Source
Source
Watch on YouTube ↗
  • Host: Chris Hussey [00:00:00]
  • Guest: Pete Callahan (US Tech, Media, and Telecom Sector Specialist within Global Banking and Markets at Goldman Sachs) [00:00:05]
  • Recording Date: Thursday, May 28, 2026 [00:00:03]

References

  1. Original source (youtu.be)

Disclaimer: Orignal content owned by or sourced from third parties. It does not represent the views of 'Nuggets' platform or it's team. AI is used extensively across this platform including for summaries. Accuracy is not guaranteed, there can be mistakes. Any info or content on this platform is not a financial, legal, or investment advice. Do your own research. Refer for complete disclosures:- Terms of Use · Full Disclaimer

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Published
May 29, 2026
Read time
4 min read
Progress0%

1. Market Overview & Structure of the Tech Rally

  • Context: The technology sector has experienced a historic, rapid run higher off its March 30th lows [00:00:18].
  • Three Core Pillars of the Rally: [00:00:28]
    1. Narrow Breadth: Over the last three months, the Nasdaq has advanced 20% [00:00:39]. However, under the hood, only about 50% of the constituent stocks in the index are up at all over that stretch [00:00:41].
    2. High Velocity: The Nasdaq is experiencing its second-best start to a calendar year in over 25 years [00:00:56].
    3. Earnings Anchor: AI-specific stocks within the S&P 500 have gained roughly 30% year-to-date [00:01:06]. Crucially, their underlying corporate earnings have risen by an identical 30% over the same period [00:01:13]. Strong fundamental earnings revisions are keeping valuation multiples in check [00:01:16].

2. Q1 Capital Expenditure Revisions & Supply Chain Dynamics

  • CapEx Revisions: First-quarter earnings results were sound, driven primarily by a significant upward wave in long-term capital expenditure projections [00:01:28].
  • The $900B Threshold: Calendar year 2027 CapEx growth estimates have been revised upward to 20%, pushing the total expected aggregate spend past the $900 billion mark for 2027 [00:01:34].
  • Visibility Out to 2027: Capacity remains structurally tight across high-performance compute and the broader AI infrastructure supply chain [00:02:01]. Due to these persistent shortages, semiconductor and infrastructure equipment companies are receiving firm enterprise orders extending all the way out into calendar year 2027 [00:02:10].

3. The Software Sector: Dispersion and Monetization Debates

  • Macro Drag & Credit Markets: Software has faced severe headwinds year-to-date [00:02:36]. Fears of software companies being rapidly disintermediated by AI infrastructure caused widespread sector selling [00:03:41]. This anxiety bled directly into the private credit markets, where lenders grew highly concerned over excessive software sector exposure [00:02:23].
  • The Return of Dispersion: The sector is shifting away from a period of uniform downward pressure (described as a "correlation one" sell-off) toward high dispersion [00:03:20]. Long-only investors and hedge funds are now actively identifying distinct winners and laggards [00:02:42].
  • Monetization at Point of Sale: The primary metric driving share re-ratings is clear evidence of AI deployment at the point of sale [00:02:58]. If a company demonstrates that AI functionality is accelerating corporate revenue growth, the market re-rates its multiple higher [00:03:33].
  • Structural Debates: Institutional investors remain heavily focused on two key debates:
    1. The structural transition from traditional subscription/seat-based monetization models toward consumption/usage-based models [00:02:51].
    2. The "incumbent vs. startup" battle, weighing whether established platforms can leverage their deep enterprise data context or if agile AI-native startups will capture market share [00:03:03].

4. Semiconductor Valuations: Tracking the 1999 Parallel

  • Historical Performance Context: Semiconductor stocks have surged nearly 80% within the first five months of the year [00:00:48]. This represents the most explosive start to a year for the sector since 1999 [00:00:51].
  • Managing Positioning Pressure: An 80% move in five months naturally introduces powerful short-term momentum dynamics and overextension risks ("too far, too fast") [00:04:17].
  • The Fundamental Anchor: Unlike purely speculative historical regimes, the medium-term path is anchored by continuous, upward earnings revisions [00:04:32]. As long as these revisions match price appreciation and contain valuation multiples, institutional investors remain highly comfortable adding to semiconductor exposure on pullbacks or momentum unwinds [00:04:37].

5. Tactical Sector Idea: Under-the-Radar Long in US Internet

  • Performance Lag: The US Internet sub-sector has notably lagged behind software performance year-to-date [00:05:01].
  • Historical Headwinds: The lag has been driven by persistent structural debates regarding the health of the consumer, long investment cycles, and the lack of clarity on how consumer-facing AI applications will be effectively monetized [00:05:10].
  • Turning Catalysts:
    1. Product Innovation: Major US Internet companies are beginning to demonstrate concrete product-side innovation tied directly to generative AI [00:05:20].
    2. Easing Consumer Headwinds: Consumer health pressures are moderating as global oil prices reset and cool off from their previous macro highs [00:05:25].
  • Tactical Outlook: Combined with significantly cleaner institutional positioning relative to overcrowded semiconductors, the US Internet sector represents a key tactical area for allocator focus heading into the summer months [00:05:29].

6. June Macro Catalysts & The Neutralization of Interest Rates

  • Macroeconomic Indicators: Market participants are heavily focused on two mid-month data points to evaluate baseline economic health and tracking inflation inputs: the upcoming Non-Farm Payrolls (NFP) report and the Consumer Price Index (CPI) print [00:05:39].
  • Industry Tone Setters: Tech investors will be monitoring a dense slate of upcoming software and semiconductor enterprise user conferences in June to judge the commercial temperature of generative AI deployments [00:05:52].
  • The Rate Correlation Shift: Historically, high-growth technology stock valuations have maintained a rigid, highly sensitive inverse correlation to interest rates [00:06:05]. Currently, the market is completely looking past interest rate levels [00:06:09]. Given the massive real-world input cost inflation that the AI hardware supply chain has already successfully absorbed and sustained, baseline interest rates are no longer treated as a primary impediment or risk factor by tech allocators [00:06:12].

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