Fidelity: Tech Stocks Can Keep ‘Climbing the Wall of Worry'

• The tech sector has experienced a rare 30% multiple contraction, which historically correlates with subsequent outperformance.
• This potential for outperformance holds true even if earnings decline, as the market has likely already discounted these concerns.
• While tech CapEx is slowing, this secular trend has historically not led to contraction and can even be a leading indicator for accelerated growth in other sectors of the US economy.

Fidelity's Denise Chisholm argues that the tech sector, despite a significant 30% multiple contraction, is positioned for future gains. Historical data suggests that such valuation resets often lead to outperformance, even if earnings growth slows, as the market has already priced in concerns. A slowdown in tech capital expenditure (CapEx) might also signal acceleration in other economic sectors.