00:00 Speaker A
Most of massive tech earnings, we all know, are within the rear view mirror now. Tariffs stay a darkish cloud of uncertainty for the sector as the specter of renewed volatility lingers. We’ll check out the state of tech with Baird managing director, that may be Ted Mortenson. Ted, good to see you.
00:14 Ted Mortenson
Good to see you.
00:16 Speaker A
So, could possibly begin, Ted, large image relating to tech. I am simply curious how you’ll how you’ll choose, Ted, how you’ll characterize sentiment towards the sector proper now. How would you describe it?
00:29 Ted Mortenson
Yeah, it is an ideal query. Sentiment is fairly adverse, truly. In case you take a look at among the portfolios which were structured, they’re very defensive. So, when you take a look at what occurred, uh, I might say the primary week of February, we had a number of complacency and the market was at its all-time highs. Then we actually, uh, pivoted all the way down to a down cycle. We’re nearly down 22%. Between that February and April timeframe, uh, folks received very defensive and I had, in my profession, I’ve by no means seen underweights the dimensions as I’ve seen in tech going into, you understand, I might say, um, April seventh was the lows. Um, you have seen a snapback of roughly 15%, and I feel that is simply folks making an attempt to get equal weight on sure sectors that they’ll see development on that sustainable.
01:56 Speaker A
It is so fascinating, Ted, as a result of earlier than that dip, there was a number of speak that tech was the brand new defensive in some methods, or that it had defensive traits due to its measurement, due to the long-term AI development story. And it would not appear to be these form of underlying beliefs have essentially gone away or or have they?
02:28 Ted Mortenson
They have not. I I I feel one of many largest reviews of the entire incomes season was Microsoft, okay? They killed it. Uh, they killed it on Azure on 35% development and half of that development was simply folks shifting the cloud. They can not even keep gen AI, uh, provide demand curves. Identical factor with Amazon. They can not they can not meet the gen AI demand. So, these corporations when you take a look at meta, Microsoft, um, particularly, their free money flowing higher than than Argentina, fairly frankly. They’re placing they’re placing free money move on the market within the 18 billion greenback vary, and that that provides them a number of latitude that they’ll spend, like they’re spending on gen AI. I might argue they’re considerably defensive when you take a look at the place the market’s going.
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