Valuations and bubble concerns are top of mind for investors as they start the new year after what can only be described as a blockbuster 2025.
Still, Andrew Slimmon – a senior expert at Morgan Stanley – believes US megacap tech stocks are actually more attractive to own “now” than they were a year ago.
His bullish remarks arrive at a time when the “Nasdaq-100” sits more than 50% above its 52-week low in early April.
Valuation reset makes US tech stocks much more attractive
Speaking this morning with CNBC, Slimmon emphasised that “Magnificent 7” tech stocks, despite AI tailwinds and no signs of earnings weakness, underperformed the broader market in the final quarter of 2025.
Since fundamentals remain intact, or even accelerating for some of these mega-cap names, their valuation multiples, naturally, are much more compelling now than at the start of 2025.
What it means is: investors can buy into earnings strength at a relative discount compared to about 12 months ago.
According to the Morgan Stanley analyst, the market’s recent rotation away from tech stocks has been driven primarily by sentiment, not deteriorating profits.
Now that multiples have contracted, the case for re-entering these fast-growing large-cap US tech stocks is stronger than ever, he concluded.
Rate cuts could renew confidence in tech stocks
Andrew Slimmon recommended long-term investors to regain exposure to the big-cap tech names also because the US Federal Reserve is broadly expected to lower interest rates further in 2026.
That’s a policy shift that has historically benefited growth-oriented sectors like technology.
Investors followed the “playbook” last year by rotating into cyclicals ahead of anticipated rate cuts, but industrial names – for the most part – have already priced in that optimism, leaving less room for upside.
By contrast, the US tech stocks combine strong earnings with valuations that have moderated, he told CNBC.
According to the Morgan Stanley expert, lower borrowing costs will further support investment in innovation, cloud infrastructure, and artificial intelligence (AI).
In short, he expects a rotation back into tech in early 2026 as rate cuts provide a tailwind for capital-intensive growth.
Deregulation stands to benefit US mega-cap tech stocks
Finally, Slimmon pointed to deregulation as a structural driver that may trigger a rally across sectors, including technology,
“Deregulation is causing capital to be released. As that capital’s released, it’s going to be deployed and companies are going to come in through with earnings,” he explained.
For tech firms, this means greater flexibility to raise funds, pursue acquisitions, and expand into new markets without the same regulatory constraints that weighed on financials post-2008.
With AI-related IPOs and equity offerings expected to dominate syndicate calendars, the ability to access capital efficiently is critical.
The portfolio manager believes deregulation will support multiple expansion alongside earnings growth – reinforcing tech’s attractiveness in 2026.
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