According to Ryan Grabinski at Strategas Securities, the US technology sector’s strong fundamentals heading into 2026 may be overshadowed by high expectations. Tech earnings growth is anticipated to surpass the overall S&P 500 index for at least the next four quarters. However, this elevated anticipation could set the stage for potential disappointment if these benchmarks are not met. Strategas Securities is a research-driven institutional brokerage and advisory firm. The firm delivers macro strategy, investment strategy, and sector strategy to institutional investors and corporate executives.
Grabinski highlighted the significant contribution of the tech sector to overall index earnings growth, projecting it to account for nearly 50 per cent next year. While acknowledging the possibility of achieving this, he cautioned that the existing high expectations could lead to disappointment if these targets are not realised. A key challenge identified by Grabinski is “the sustainability of the capital expenditure cycle” that propelled mega-cap tech firms higher in 2025.
Grabinski suggests that any deceleration or reduction in this circular capital expenditure spending at the top of the market would disproportionately affect technology companies. He added that if multiples expand, it will likely be driven by softer earnings rather than accelerating growth. He anticipates these concerns will persist into 2026, noting early indications that growth expectations for technology spending may be revised downward.
Despite potential challenges, a pullback in capital expenditure could free up capital for increased dividends, share repurchases, or renewed mergers and acquisitions. This could provide an alternative avenue for value creation within the technology sector, even if earnings growth faces headwinds.
