Technology has been the star performer as geopolitical tensions eased and the market’s focus returned to AI.
The rebound has taken our Tech Sentiment Matters Aggregate back close to the highs seen at the peak of the last Tech rally. That does not mean the rally has to end. Strong trends can stay strong for longer than sentiment alone suggests.
But vulnerabilities are building again.
Have investors moved too quickly back into the comfort trade: secular growth, AI leadership and earnings resilience?
As always, this is not a call to “buy” or “sell” Tech. It is a sentiment note.
And sentiment analysis is best used to do two things:
- Identify when optimism becomes sufficiently stretched that vulnerability shifts to the downside.
- Stress-test the prevailing narrative — where is consensus most confident, and what would force a rethink?
Before we go further, let’s remember 2022 and 2025.
Sentiment doesn’t stay extreme forever
Tech is not immune to resets. It can go from “can’t lose” to “needs to prove itself” remarkably quickly.
In 2022, coming out of the pandemic and its best run since the Tech bubble, Tech suffered one of its worst years on record. What mattered was not just valuations or rising yields. The bigger shift was that relative earnings expectations rolled over, and the market stopped paying for long-duration optimism.
Then ChatGPT arrived, the AI capex cycle ignited, and the narrative flipped again — fast.
The last six months offer another example of how extreme investor bullishness can weigh on equity returns.
After taking a hit during the Liberation Day sell-off in April 2025, Tech roared back. Performance recovered strongly, and sentiment rose from the 38th percentile to within a whisker of a new all-time high by late October.
From that point onward, Tech started to underperform the market, despite earnings continuing to be revised higher. It was a reminder that nothing moves in a straight line forever. Even in a secular trend of Tech outperformance, there can be painful and prolonged setbacks.
Sentiment & positioning: back at the all-time high
We always start with the data.
Our Sentiment Matters Aggregate for Technology has risen sharply from its Iran war lows.
At the end of March, the average indicator in our heatmap sat at the 66th percentile — slightly into bullish territory. By this week it had climbed to roughly the 72nd percentile, taking the SMA within a whisker of its all-time high, at the 99th percentile.
