Tech Spending Sparks Worries. Most Borrowers Can Handle It.

People testing virtual reality headsets on the Meta Quest stand at the Paris Expo Porte de Versailles in June. (Amaury Cornu / Hans Lucas / AFP / Getty Images)

This commentary was issued recently by money managers, research firms, and market newsletter writers and has been edited by Barron’s.

The Tech Spending Spree…

Market Perspective
CpocTruist Advisory Services
Nov. 14: Debt financing bears watching, but most companies are adding leverage from a position of strength—supported by high credit ratings and robust free cash flow margins (though moderating from elevated levels). Importantly, many large-cap tech leaders such as Google, Microsoft, and Amazon generate hundreds of billions of dollars annually, from diverse revenue streams, to help fund the investment.

History offers perspective: In the 1990s, Amazon faced similar skepticism over aggressive spending and lack of profits. Those investments ultimately paved the way for AWS, a major growth engine—although the stock endured a volatile path along the way. While capital misallocation is inevitable and there will be winners and losers, the long-term innovation cycle remains intact.

From a broader perspective, sentiment is resetting quickly, which should eventually set the stage for stocks to reclimb the proverbial wall of worry. Indeed, the latest survey from the the American Association of Individual Investors showed the percentage of investors with a bearish outlook spiked to 49%—a two month high—which, from a contrarian perspective, can be viewed as a positive.

Keith Lerner, Dylan Kase, Jake Reid

…and Vendor Financing

UBS House View—Daily U.S.
Nov. 14: Vendor financing, a key factor in the formation and collapse of the dot-com bubble, has declined significantly. Our examination of events in the lead-up to the dot-com bubble suggests that we are unlikely in one now. Vendor financing was prevalent during the telecom boom—equipment manufacturers helped finance smaller companies with limited creditworthiness or large infrastructure projects that traditional financial institutions were cautious about, accepting greater risk to facilitate sales and expand market share in a competitive sector in the late 1990s. At its peak, vendor financing from North American suppliers exceeded 120% of their pretax earnings, based on our estimates.

The financial reforms in the early 2000s fundamentally changed vendor financing practices, with enhanced disclosure requirements and more rigorous accounting standards. Fast-forward to today, we estimate that the recent collaboration between Nvidia, Oracle, and OpenAI represents only about 5% of Nvidia’s projected pretax earnings for 2026.

The cautionary tale of the dot-com bubble has also led companies to prioritize organic growth over a reliance on credit-driven strategies. Leading tech companies today generate more stable revenue streams, and have maintained stronger cash positions and balance sheets. As they continue to demonstrate solid earnings growth, we believe the valuations of today’s tech giants are justified.

Ulrike Hoffmann-Burchardi & Team

2026 Investment Outlook

Special Report
Ned Davis Research
Nov. 13: With valuations stretched and the global bull market mature, we will be watching to see if equities withstand four-year cycle headwinds and other challenges ahead.

At 3% for 2026, global real GDP growth should be little changed from the current year’s growth. But that will require supportive monetary and fiscal policies to offset the continuation of policy uncertainty and geopolitical risk.

We favor bonds over cash in our global and Europe allocations. Benign long-term inflation expectations should help bonds, although the reduced volatility will leave the developed bond markets vulnerable to shocks.

The subdued global growth environment supports a muted outlook for broad commodity returns, but precious metals should outperform. We are bullish on gold and bearish on the U.S. Dollar Index.

Our regional equity positioning includes an overweight allocation to Emerging Markets and an underweight allocation to the U.S. positions likely to remain

Tim Hayes & Team

S&P 500: Technical Checkup

Phases & Cycles
Capitalight Research
Nov. 12: The S&P 500 remains firmly in a long-term uptrend. The index rallied strongly at the end of October before pulling back to test its 10-week moving average (50-day MA) earlier this month. Over the past two years, it has consistently found support near the 10-week MA, rarely declining as far as the 40-week MA.

Below the 10-week MA, solid support lies around 6,540, near the recent lows, and additional support at the former resistance level near 6,150, where the 40-week MA currently resides—about 10.2% below current levels. As long as the 10-week MA continues to act as support, we don’t expect this lower level to be tested.

Monica Rizk

Tracking Layoffs

The Pulse of the Market
RBC Capital Markets
Nov. 10: Even when government data are readily available, we like to keep an eye on the monthly Challenger layoff report. Last week’s update confirmed what we’ve noticed in our own news feeds—that layoff announcements have moved up, although the Challenger release indicated they remain well below the levels of the DOGE spike.

While several industries saw an increase in layoff announcements, what we noticed were increases for both Tech and Industrial Goods. While the latter makes sense in the context of tariffs, it is something to monitor as spikes in Industrial layoffs often occur during periods of financial market stress, and those for October came in similar to those seen in the 2015-2016 industrial recession. Tech layoffs also tend to move up during periods of market stress, but interest us for a different reason. In this category we’ve seen several spikes since 2020, and what came through in October doesn’t look unusual for the post-Covid era.

Lori Calvasina & Team

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