Chart of the Week: US tech sector still has room to run
The latest from the Morningstar US team.
Mentioned: NVIDIA Corp (NVDA)
This week’s chart comes from the 2026 North America Market Outlook authored by Dave Sekera and Preston Caldwell.
Analysts expect AI buildout boom will last longer
The US tech sector is now attractive following fair value estimate increases in the last quarter of 2025. The sector is now trading at an 11% discount.
US tech had a bumpy start in the first quarter of 2025 but has since been rebounding since early April. This was after the Trump administration introduced sweeping trade policy changes, including the heavy use of tariffs. Over 2025, tech was the second-strongest performing sector, outperforming the market by more than 8%.
Software offers the most upside
Generative AI remains the largest theme within the tech sector. Software firms are developing and incorporating next-generation AI capabilities into their solutions, while cloud providers are introducing new services and scaling capacity, and some semiconductor firms, such as Nvidia, are experiencing surging demand for AI and data center chip applications.
We see attractive value within the AI theme as being hard to find. Indeed, many AI-themed stocks have oscillated wildly so far this year. The median U.S. technology stock is undervalued, with an attractive margin of safety.
You can find previous editions of Chart of the Week here.
