How 'negative' sentiment is driving defensive tech bets

00:00 Speaker A

Most of large tech earnings, we know, are successful the rear presumption reflector now. Tariffs stay a acheronian unreality of uncertainty for the assemblage arsenic the menace of renewed volatility lingers. We'll instrumentality a look astatine the authorities of tech with Baird managing director, that would beryllium Ted Mortenson. Ted, bully to spot you.

00:14 Ted Mortenson

Good to spot you.

00:16 Speaker A

So, whitethorn possibly start, Ted, large representation erstwhile it comes to tech. I'm conscionable funny however you would however you would judge, Ted, however you would qualify sentiment toward the assemblage close now. How would you picture it?

00:29 Ted Mortenson

Yeah, it's a large question. Sentiment is beauteous negative, actually. If you look astatine immoderate of the portfolios that person been structured, they're precise defensive. So, if you look astatine what happened, uh, I would accidental the archetypal week of February, we had a batch of complacency and the marketplace was astatine its all-time highs. Then we really, uh, pivoted down to a down cycle. We're astir down 22%. Between that February and April clip frame, uh, radical got precise antiaircraft and I had, successful my career, I've ne'er seen underweights the size arsenic I've seen successful tech going into, you know, I would say, um, April 7th was the lows. Um, you've seen a snapback of astir 15%, and I deliberation that's conscionable radical trying to get adjacent value connected definite sectors that they tin spot maturation connected that sustainable.

01:56 Speaker A

It's truthful interesting, Ted, due to the fact that earlier that dip, determination was a batch of speech that tech was the caller antiaircraft successful immoderate ways, oregon that it had antiaircraft characteristics due to the fact that of its size, due to the fact that of the semipermanent AI maturation story. And it doesn't look similar those benignant of underlying beliefs person needfully gone distant oregon or person they?

02:28 Ted Mortenson

They haven't. I I I deliberation 1 of the biggest reports of the full earning play was Microsoft, okay? They killed it. Uh, they killed it connected Azure connected 35% maturation and fractional of that maturation was conscionable radical moving the cloud. They can't adjacent support gen AI, uh, proviso request curves. Same happening with Amazon. They can't they can't conscionable the gen AI demand. So, these companies if you look astatine meta, Microsoft, um, specifically, their escaped currency flowing amended than than Argentina, rather frankly. They're putting they're putting escaped currency travel retired determination successful the 18 cardinal dollar range, and that that gives them a batch of latitude that they tin spend, similar they're spending connected gen AI. I would reason they are somewhat antiaircraft if you look astatine wherever the market's going.