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Quarter-End Insights

Technology: Shift to Cloud Computing Most Important Story

The sector looks modestly overvalued as a whole, but there are some attractive firms in enterprise software and IT services.

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  • Overall, we view the tech sector as modestly overvalued at a market-cap-weighted price/fair value of 1.08
  • Enterprise cloud computing remains the most important story in tech
  • Consolidation remains at the forefront in technology, particularly in semis and software
  • Changes to U.S. tax laws should lead to even more attractive capital allocation policies

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