Technology stocks continue to play a significant role in the performance of major U.S. equity indexes. Information Technology companies now make up about one-third of the S&P 500’s market capitalization, while Communication Services account for another 10%. In 2025, all eleven sectors within the S&P 500 have posted positive returns, with six sectors rising by at least 11%. Among the largest companies in the index—often called “the Magnificent Seven”—five have gained at least 10% so far this year. NVIDIA leads with a 29% increase, followed by Broadcom at 28% and Meta Platforms at 26%, while Apple and Amazon have not performed as strongly.
These trends are consistent with recent years. Tech-related firms across Information Technology, Communication Services, and Consumer Discretionary drove annual returns above 25% for the S&P 500 in both 2023 and 2024.
Ongoing developments in artificial intelligence add some uncertainty to the sector outlook. AI and cloud computing remain major areas of corporate investment as businesses seek productivity gains and improved financial results. Eric Freedman, chief investment officer for U.S. Bank Asset Management Group, commented: “We’re seeing information technology spending not just from consumers, but on a business-to-business basis. That’s where companies are spending their capital.”
Rob Haworth, senior investment strategy director with U.S. Bank Asset Management Group, pointed out that investors are watching valuations closely: “In the long run, these valuations look fine, but in the short run, we have questions to overcome.” He added: “How will global tariffs affect the macro-economic environment? What should AI development cost considering new competition? Are applications expanding at a pace that requires continued robust capex spending?”
Recent quarterly earnings reports have generally exceeded expectations and supported higher stock prices. Haworth addressed concerns about high valuations: “It would take a meaningful earnings deterioration for that to occur, which doesn’t seem likely given current conditions.”
The innovative nature of technology continues to attract investor interest. Terry Sandven, chief equity strategist with U.S. Bank Asset Management Group said: “Fast is getting faster, and speed, scale and efficiencies don’t happen without technology.” He noted that Communications Services and Information Technology indexes have often outperformed the broader S&P 500 despite some volatility—a trend continuing into this year.
A hypothetical $100,000 invested in the S&P 500 Communications Services and Information Technology index at the end of 2018 would be worth nearly $445,000 by August 2025—significantly more than if it had been invested broadly across all S&P 500 stocks during that period.
Sandven remains optimistic about technology’s long-term prospects despite short-term fluctuations: “Companies seek growth. They’re achieving this through technology spending, not by hiring more people,” he said. Sandven also stated: “Data fuels AI. Companies involved in chip design, data capture, storage & processing, software & analytics, security, and the electrification of data centers seem particularly well-positioned for longer-term growth.”
U.S. Bank Asset Management Group maintains a positive view on tech stocks but recommends selectivity when investing in this sector due to its competitive nature; many startups do not succeed even as others thrive.
Investors are encouraged to align their portfolio choices with their goals and risk tolerance after consulting financial professionals.
The S&P 500 Index is composed of widely traded U.S. stocks representing overall market performance; it is unmanaged and cannot be directly invested in.
