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Stocks•18 April 2026•

1 min read

Tech Sector Valuation Gap: Software Seen Undervalued as Semiconductors Face Overvaluation

Key Facts

1Software and IT services are currently undervalued relative to 11-year averages.

2Semiconductors and hardware are considered deeply overvalued.

3PTF ETF outperformed the XLK benchmark over the past 12 months despite historical underperformance since 2006.

A recent analysis of the technology sector reveals a significant valuation gap between sub-sectors, with software and IT services currently trading below their 11-year averages. Conversely, the report warns that semiconductors and hardware segments are deeply overvalued at current levels. Regarding investment vehicles, the PTF ETF has demonstrated resilience by outperforming the XLK benchmark over the past 12 months, despite a historical trend of underperformance dating back to 2006. This divergence suggests a tactical rotation opportunity for investors to move from hardware into undervalued software assets. However, analysts maintain that PTF remains more suitable for momentum swing trading rather than long-term strategic holding. These findings highlight the necessity for a selective approach as the tech rally faces valuation headwinds in hardware.