The technology sector's relentless advance in 2026 has wealth managers scrutinizing portfolios for signs of a repeat of the dotcom bubble. In May alone, Dell Technologies shares surged 101%, while Micron Technology gained 88%, closely followed by Snowflake and Datadog, each up 87%. The VanEck Semiconductor ETF rose nearly 20% for the month and 76% year-to-date, and the Invesco QQQ Trust ETF climbed 29% since April.
These eye-popping returns have revived memories of the late 1990s, when technology stocks soared before collapsing. However, several portfolio managers argue that today's rally is grounded in earnings growth and real demand, not speculation. Alex Tollen, president of McGowanGroup Asset Management, compares the current environment to the energy infrastructure buildout from 2004 to 2014, noting that earnings momentum and robust GDP growth are driving markets.
“At some point the infrastructure is in and the oversupply causes a re-rate of the companies' stock values,” Tollen said. He advises monitoring the rate of change in earnings and GDP inputs, and reducing exposure if a disconnect emerges. His firm employs a “tree and the fruit harvest” strategy, taking 10% to 15% profits at each new high through outright sales or options strategies like call writing and collars, then shifting proceeds to income or value categories.
Matt Moberg, portfolio manager of the Franklin Focused Growth ETF, also dismisses bubble fears. He highlights that GPU supply remains deeply constrained, unlike the idle fiber-optic capacity of the dotcom era. Nvidia trades at roughly 21 times next twelve-month earnings, a stark contrast to Cisco's 126 times multiple in March 2000. “The dotcom period was characterized by sky-high valuations disconnected from business realities. We do not see that dynamic today,” Moberg said.
Moberg is watching the supply-demand imbalance in AI infrastructure, where semiconductor price increases are driving revenue growth more than volume. He views volume catching up as a positive sign of capacity expansion. AI adoption has reached 100 million users faster than prior internet apps, and use cases have expanded beyond consumers to enterprise applications across sectors. Active management, he argues, is essential to distinguish lasting trends from hype, citing past cycles like direct-to-consumer in 2016 and cryptocurrency in 2017.
Andrew Mathewson, portfolio manager of the ClearBridge Emerging Markets Portfolios, acknowledges similarities to past speculative periods but emphasizes key differences. “In the dotcom era, companies built with the idea that demand would come and demand never came. The build today comes from cash or free cash flow generation, as opposed to debt-driven investment,” Mathewson said. He cautions that debt-financed investment could emerge, requiring vigilance around demand and supply evolution.
For advisors, the debate underscores the challenge of balancing client exposure to a high-flying sector while managing concentration risk. As wealth managers maintain cautious optimism on equities for 2026 second half, the tech rally's sustainability remains a key question. Some see parallels to the looming IPOs of SpaceX, OpenAI, and Anthropic, where valuation timing is critical. Others point to the diversification role of gold as a hedge against tech volatility.
Ultimately, the consensus among these managers is that while risks exist, the current rally is not a bubble. Earnings support, supply constraints, and cash-funded investment distinguish it from the dotcom era. Yet they advise constant monitoring of earnings trends, GDP inputs, and adoption rates to avoid being caught in a potential downturn.
