Is it time to buy tech, again? A flurry of good news from Broadcom may hold the answer
Has technology hit rock bottom? This is the question investors have been asking since the relief rally on the last trading day of March, which marked the end of the first quarter. Before Tuesday’s decline, the tech-heavy Nasdaq closed higher in each of the last four sessions due to concerns about President Donald Trump’s Iran deadline. With almost a week left in the second quarter, it would certainly be nice to think that technology could retake its lead in the market. However, it’s hard to say for sure whether the technology is out of control, given the likelihood that the Iran war will escalate in a matter of hours, and with it the material increase in the risk that things will spiral out of control and oil prices will remain high for longer. However, the sector has definitely become more attractive from a valuation perspective. And if timing the market isn’t your game — and we don’t think it should be — it might be time to start thinking about whether your exposure to technology is where it needs to be in case the market starts to regain some of its lost ground. Nasdaq closed at a record high of 23,958 on October 29, 2025. After a tortuous start to the new year, the index came very close to that high in late January. There has been a decline since then, with a brief dip into correction territory (a decline of 10% or more from recent highs) in late March. Of course, we may see new lows ahead; That’s always a possibility, especially if things start to get out of control with Iran. But based on several analyst notes, it’s clear that the Street is starting to become a little more positive about the tech sector. Is it time to buy technology? Goldman Sachs on Tuesday identified three factors: the hyperscaler’s fear of overspending; Disruption of enterprise software by AI; and a return to heavy asset, low obsolescence (HALO) stocks – which contributed to the tech sector having “one of the worst periods of relative underperformance” since the early 1970s. As a result, analysts noted that tech valuations are now low, and valuations for hyperscalers in the US are closer to the rest of the market. In other words, hyperscale players are currently valued at par with the average US large-cap company, despite their superior growth outlook. This was because although price action was negative, forecast revisions were positive. In fact, analysts said earnings revisions in the tech sector were better than in other sectors of the market, creating a “record gap between performance and underlying earnings growth.” Perhaps most interestingly, analysts concluded that while the technology is already attractive on its own fundamental values, the sector could also be seen as a hiding place if disruption in the Strait of Hormuz lasts longer than expected. “[Tech] “He may become more defensive over the next few months,” Goldman said. That’s because big tech companies aren’t as dependent on the health of the economy to grow. Wells Fargo Investment Institute (WFII) upgraded the tech sector from neutral to positive, saying secular AI tailwinds should continue to drive above-market growth for sector sales and earnings through the remainder of the year. “The gradual decline over the past few months has brought valuations to more attractive levels, and we believe pessimistic sentiments. Strategists also noted the defensive nature of the sector, emphasizing that information technology “has outperformed the S&P 500 index due to its secular growth and quality characteristics since the start of the war.” Making the underlying resilience argument, UBS analysts said there was year-over-year revenue growth for what they call the technology+ cohort, which includes information technology stocks and information technology-adjacent names such as Amazon, Alphabet and Meta. They expect the platforms to rise 30.4% in the first quarter, compared to just 5.1% for the rest of the S&P 500. More attractive valuations aren’t always enough to get investors bullish, but is that true for those of us who are in the market for the long haul? On Monday evening, Broadcom also announced a deal with Alphabet’s Google to develop and supply future generations of the custom silicon the two are co-developing for use in Google data centers. Separately, Broadcom, Google and Anthropic announced an expansion of their collaborative efforts that will see Anthropic gain access to 3.5 gigawatts worth of TPU-based AI, although this does not appear to be an issue at the moment, as Anthropic says demand for its Claude AI model continues to grow from 2026 onwards, and the company is now looking at around 900,000 units from 2025. Last week, we heard that Nvidia and Broadcom rival Marvell Technology were collaborating on systems that combine Nvidia’s ecosystem and hardware with Marvell’s proprietary chip solutions. This should also alleviate concerns that Alphabet might expand its collaboration beyond Broadcom or bring its design process in-house, unlike what Apple has done in recent years. He concluded that the move will continue, “This is when it finally recovers from the troubles it’s had.” While it’s too uncertain to call a bottom in tech, we agree with Wall Street analysts that sector valuations are too cheap to ignore, but as Tuesday’s news from Broadcom and upward earnings revisions clearly show, the decline in valuations has made these names attractive, not only if the war ends and a path opens up for the Federal Reserve to cut interest rates. Growth fears also arise if the fight intensifies, so growth names are sought out regardless of broader economic growth trends (Jim Cramer’s Charitable Trust is NVDA, AVGO, GOOGL. See here for the full story). By subscribing to the CNBC Investment Club with Jim Cramer, you will receive a trade alert before Jim buys or sells a stock in his charitable trust’s portfolio. If he talked about a stock on TV, he waits 72 hours after giving the trading alert before executing the transaction. 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