Whatever happened to the rotation out of tech stocks? Through large parts of July and August, Wall Street investors seemed to be shaking off their addiction to a handful of big tech companies that had underpinned the market’s rise.
As the mood teetered between fears of a sharper downturn and resurgent inflation, the view gained ground that Big Tech valuations were overstretched and it was time to make way for other sectors that tend to perform better in a weakening economy. A change of heart over AI sharpened the worries, as the massive boom in new AI chips and other equipment far outpaced current demand.
Yet as many tech companies prepare to release their latest quarterly earnings, tech is back at or close to record highs. Wall Street has rediscovered its fixation with the so-called Magnificent Seven. The AI wobbles have been put safely back in the closet.