Market Musings 270626: Time to diversify away from Tech
Podcast this week: The importance of having a smart Strategic Asset Allocation
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Bonus content: 2026 Updated Investment Themes
Why tech-heavy investors should consider diversifying now
The current stock market narrative has been centred around two key themes:
1. The Iran conflict and closure of the Strait of Hormuz.
2. The AI investment boom
Given the recent memorandum of understanding and ongoing negotiations between the US and Iran to find a long lasting peace in the Gulf, near term risks due to a lack of oil supply look to have diminished.This is clear from the oil market reaction, with the Brent crude oil price falling from nearly $120 barrel to $74 at present.
As one might expect, the energy sector is unwinding its March rally on the back of this decline in oil prices. However, some sub sectors are holding up better than others, notably the Refiners such as Valero Energy, Marathon Petroleum and Phillips 66. While crude oil prices have fallen by nearly 40% from the conflict peak, the price of refined product such as petrol and diesel have fallen but by far less, implying that refining margins remain abnormally high, given the ongoing crunch in supply of these refined products around the world.
Focus therefore switches to the second theme, the ongoing investment boom related to artificial intelligence. Hyperscalers such as Google, Meta and Oracle have all announced ever-increasing investment plans for new AI related data centres, both for this year and indeed for 2027. No surprise then that earnings results for AI-related companies in the semiconductor space in particular continue to be so strong. Micron, the memory chipmaker, is just the latest example of this AI-related demand boom flowing through not only into higher sales and revenues, but also into far higher profit margins and therefore earnings.
However, If you thought that this AI investment was lifting all technology boats, you would be wrong.Two areas stand out to me within the broad technology sector as suffering from relative weakness, for different reasons.
Firstly, the…
