Hiroshi Watanabe
The S&P 500’s Information Technology sector (NYSEARCA:XLK) saw growth in the last quarter amid easing geopolitical tensions and reduced concerns regarding the potential inflationary impact of Trump’s tariff policies.
The tech sector, which holds the highest weightage on the S&P 500, gained more than 21% in the quarter, outperforming the broader market, which grew more than 10% in the past three months.
With high-profile names such as Nvidia (NASDAQ:NVDA), Microsoft (NASDAQ:MSFT), and Apple (NASDAQ:AAPL), the information technology sector was able to move past the earlier volatility, gaining more than 10% so far this year.
The S&P 500’s tech sector had a rough start to the year after a Chinese startup announced the launch of DeepSeek, which rattled tech stocks after it unveiled its AI model R1.
The sector saw further decline after Trump announced his reciprocal tariffs, hitting key nations in the semiconductor supply chain, which led to considerable losses for certain chip stocks.
However, XLK rebounded strongly in the last quarter, fueled by robust AI demand, strong earnings, and easing trade tensions with China.
According to Seeking Alpha’s Quant rating system, the sector has an average health score of 3.27. The system awards grades based on quantitative measures, like valuation, earnings growth, and recent stock performance. The highest possible score for any individual company is a 5.
Among individual companies in the tech sector, six stocks were rated as BUY or higher based on their Quant ratings, 60 stocks were rated NEUTRAL, and two stocks were considered SELL or lower.
Semiconductor manufacturing company Micron Technology (NASDAQ:MU) held the highest rating this quarter, with a Quant score of 4.96, followed by Seagate Technology (NASDAQ:STX) and Autodesk (NASDAQ:ADSK). These three companies owed their higher ratings to high grades in areas such as profitability, growth, and momentum.
Among some tech heavyweight names, AI giant Nvidia (NVDA) had a score of 3.40, while Microsoft (MSFT) and Apple (AAPL) had scores of 3.49 and 3.32, respectively.
Enphase Energy (NASDAQ:ENPH) was the lowest-rated stock this quarter with a score of 1.28. Analysts have warned that the earlier than expected phaseout of residential solar tax credits could sap demand and squeeze margins across the solar-tech industry.
Analysts foresee that installers and consumers will move toward cheaper hardware to offset weaker economics, placing Enphase’s premium micro-inverter margins at risk, with the company ceding market share as price becomes the primary differentiator.