Tech Divergence: Chips Soar, Software Weak - Will It Continue?

Jonathan WeberInvesting GroupFollow5ShareSavePlay(9min)CommentsSummaryTech sector divergence is stark: chip stocks soar on AI demand, while software stocks lag due to perceived AI threats.Semiconductor names like AMD, AVGO, and TSM have rallied sharply, but some now appear overvalued relative to fundamentals.Software stocks such as ADBE and CRM trade at undemanding single-digit EV/EBITDA multiples, presenting potential value after indiscriminate sell-offs.I see opportunity in oversold software names like ADBE, which could outperform high-flying chip stocks as valuations normalize.Looking for a helping hand in the market? Members of Cash Flow Club get exclusive ideas and guidance to navigate any climate. Learn More » Jonathan Kitchen/DigitalVision via Getty Images Article Thesis Tech stocks, overall, have done well in the recent past, but not all of them are created equal: segments such as chips have done very well on the back of a massive AI infrastructure spending spree, while software stocks have been weak dueThis article was written byJonathan Weber53.86K FollowersFollowJonathan Weber holds an engineering degree and has been active in the stock market and as a freelance analyst for many years. He has been sharing his research on Seeking Alpha since 2014. Jonathan’s primary focus is on value and income stocks but he covers growth occasionally. He is a contributing author for the investing group Cash Flow Club where along with Darren McCammon, they focus on company cash flows and their access to capital. Core features include: access to the leader’s personal income portfolio targeting 6%+ yield, community chat, the “Best Opportunities” List, coverage of energy midstream, commercial mREITs, BDCs, and shipping sectors,, and transparency on performance. Learn More.Analyst’s Disclosure: I/we have a beneficial long position in the shares of ADBE, TSM, GOOG either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.