Is it time to buy tech, again? A flurry of good news from Broadcom may hold the answer
Has tech bottomed? That’s the question investors have been asking since the relief rally on the final trading day of March, which marked the end of the first quarter. Before Tuesday’s decline, driven by concern about President Donald Trump ‘s Iran deadline, the tech-heavy Nasdaq closed higher in each of the past four sessions. It certainly would be nice to think that nearly a week into the second quarter, tech can retake its leadership in the market. However, given the possibility of a massive ramp-up in the Iran war in a matter of hours — and, with it, a material increase in the risk that things spiral out of control and oil prices stay higher for longer — it’s hard to say for sure whether tech is out of the woods. That said, the sector has certainly gotten more attractive from a valuation perspective. And, if timing the market isn’t your game — and to be sure, we don’t think it should be — it may be time to start thinking about whether your tech exposure is where it should be if the market starts to reclaim some of its lost ground. The Nasdaq closed at a record high of 23,958 on Oct. 29, 2025. After a meandering start to the new year, the index came within a whisker of that high in late January. Since then, it’s been downhill, with a brief dip into correction territory — a decline of 10% or more from a recent high — in late March. Sure, we could see new lows ahead; that’s always a possibility, especially if things start to get out of hand with Iran. However, based on several analyst notes, it’s clear that the Street is starting to get a bit more positive on the tech sector. Time to buy tech? Goldman Sachs on Tuesday identified three factors — fears of hyperscaler overspending; AI disruption of enterprise software; and a rotation into heavy asset, low obsolescence (HALO) stocks — that contributed to the tech sector having “one of the worst periods of relative underperformance” since the early 1970s. As a result, the analysts noted that tech valuations are now low — and for U.S. hyperscalers, valuations are near the rest of the market. Put another way, hyperscale players are currently being valued the same as the average U.S. large-cap company, despite a superior growth outlook. That has happened because while the price action has been negative, the estimate revisions have been positive. In fact, the analysts said that earnings revisions in tech have actually been better than in any other sector of the market, creating a “record gap between performance and underlying earnings growth.” Perhaps most interesting, the analysts concluded that while tech is already attractive on its own fundamental merits, the sector could also be viewed as a place to hide out should the disruption in the Strait of Hormuz go on longer than expected. “[Tech] might prove to be more defensive over the next few months,” Goldman said. That’s because big tech companies are not that dependent on the health of the economy to be able to grow. The Wells Fargo Investment Institute (WFII) upgraded the tech sector to favorable from neutral, saying that secular AI tailwinds should continue to drive above-market growth for sector sales and earnings through the rest of the year. “The gradual drawdown over the past few months has brought valuations to more attractive levels, and we believe pessimistic sentiment around the sector is overdone,” the WFII noted. The strategists also called out the defensive nature of the sector, highlighting that information technology has “outperformed the S & P 500 index since the war broke out due to its secular growth and quality characteristics.” Driving the fundamental resiliency argument home, UBS analysts said that year-over-year revenue growth for what they call the tech+ cohort, which includes information technology stocks and info tech adjacent names like Amazon, Alphabet, and Meta Platforms, is expected to accelerate to 23% in the first quarter. They expect tech+ earnings to grow 30.4% in Q1 versus just 5.1% for the rest of the S & P 500. More attractive valuations are not always enough to turn investors bullish. But as positive updates trickle in, they should be for those of us in the market for the long haul. Broadcom mojo back? That’s especially true when the news is about the expansion of a material, long-term partnership, as was the case Monday evening when Broadcom announced that it had entered an agreement with Alphabet ‘s Google to develop and supply future generations of TPUs, the custom silicon that the two have co-developed for years, through 2031. Broadcom will also supply networking and other components for use in Google data centers. Separately, Broadcom, Google, and Anthropic announced an expansion of their collaboration efforts that will see Anthropic have access to 3.5 gigawatts worth of TPU-based AI compute, starting in 2027. The prior terms called for 3GW. The agreement will depend on Anthropic’s ability to keep growing, but that doesn’t appear to be an issue at the moment. Anthropic said that demand for its Claude AI model has continued to accelerate to start 2026, with the company now operating at a $30 billion run-rate revenue, up from about $9 billion exiting 2025. The news, collectively, certainly serves to alleviate any Broadcom concerns we had following last week’s news that Nvidia and Broadcom competitor Marvell Technology teamed up to collaborate on systems that combine Nvidia’s ecosystem and hardware with Marvell’s custom chip solutions. It should also temper investor concerns that Alphabet could look to expand collaboration beyond Broadcom, or bring the design process in-house, not unlike what we have seen Apple do in recent years. Jim Cramer admitted that his knee-jerk reaction to Tuesday’s Broadcom rally was to trim some. But, considering the three-month slide from its all-time highs in December 2025, Jim ultimately concluded that the move was to hold on. “Don’t sell it,” he said. “This is when it’s finally getting out of the problems it’s been having.” Bottom Line While it is far too uncertain to call the bottom in tech, we tend to agree with the Wall Street analysts that sector valuations have become too cheap to ignore. The stocks may be down on the year, but as Tuesday’s news from Broadcom demonstrates, and the upward earnings revisions in the sector clearly indicate, the businesses these stocks represent are as strong as ever. The decline in valuations has made these names attractive — not only in the case that the war resolves and a pathway opens for the Federal Reserve to cut interest rates, but also in the event that the war intensifies, resulting in growth fears and, in turn, a search for those names that grow regardless of broader economic growth trends. (Jim Cramer’s Charitable Trust is long NVDA, AVGO, GOOGL. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
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