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Quarter-End Insights

Technology: Valuations Painting Overly Rosy Scenarios

Semiconductor equipment appears overvalued as booming near-term orders won't last forever, while some value remains in SaaS vendors.

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  • Overall, we view the tech sector as overvalued at a market cap weighted price/fair value of 1.09.
  • We still see a tectonic shift toward enterprise cloud computing.
  • Semiconductor equipment appears overvalued as booming near-term orders won't last forever.

Overall, we view the tech sector as overvalued today at a market cap weighted price/fair value of 1.09 as of the end of August, versus 1.13 as of the end of May and 1.06 at the end of February. The Nasdaq index rose about 4% from the end of May to the end of August.

Brian Colello does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.