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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

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