XLK One of three focus sectors

Technology. Three parts, not one.

Technology sets the tone for the whole tape, which makes it the easiest sector to be vague about. We split it into three groups that rarely move for the same reason, and name which one is carrying the index on the day.

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Inside XLK

One index, three different businesses.

Software

Recurring revenue, priced off the long end.

Seat growth against consumption pricing, because the two tell different stories about the same revenue line.
Net retention as the number the market actually pays for, ahead of headline growth.
Sensitivity to the long end, since a duration asset reprices on rates before it reprices on results.

Semiconductors

The cycle running underneath the narrative.

Inventory building faster than it sells through, which is the classic late-cycle tell.
Foundry utilisation and the capex being committed against it.
Memory and logic diverging, which usually means the cycle is turning rather than pausing.

AI and LLMs

Capital spent now against revenue disclosed later.

The distance between infrastructure spend and the AI revenue anyone will actually put in a filing.
Power, cooling and grid access behaving as the binding constraint rather than chips.
Inference cost per unit of work falling, and who captures the saving.

Technology in every brief

XLK appears in the Morning brief every trading day, free with an account. The full Technology research and the deep-dives are part of Pro.

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