UK tech stocks continue to find support at around COVID-19 pandemic-level lows, following the ruthless five-year bear market. Indeed, large cap software & services stocks have rebounded by ca.40% over the past five months, while tech hardware remains in focus following the global semi-conductor boom.
While the advancement of large language models (LLMs), combined with massive data centre investment, generated fears of reduced barriers to entry across the software industry, the reality is more complicated, as LLM tokens add a new cost line, and AI advancements add an entirely new level of complexity to business.
Meanwhile, our preferred investment strategy is to focus on potential recovery stocks with attractive valuations while staying clear of hyped-up stocks.
Trading updates continue to be positive, albeit at significantly lower levels than we saw in January through to April this year. This is in spite of the ongoing challenging economic and geopolitical backdrop.
Going forward, the question is: can the market generate a similar typical strong first quarter as we move into 2027?
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