PSCT Overview

Gene Munster's 2026 Predictions: Munster forecasts a 10% increase in the Nasdaq, small-cap tech outperforming broader tech, and significant Capex growth from major tech companies, while predicting that top private AI firms will remain private.

Apple and Alphabet's Performance: He anticipates Apple will be a top performer in the first half of 2026, driven by new products, while Alphabet is expected to lead the Magnificent Seven stocks by the end of the year due to its strong AI capabilities.

Tesla's Developments: Munster predicts Tesla will achieve fully autonomous Robotaxi operations in five cities and that its delivery growth will be modest, missing broader market expectations.

Waymo's Growth: He expects Waymo to reach one million paid rides weekly by the end of 2026, indicating significant advancements in self-driving technology.

XLK's Winning Streak: The Technology Select Sector SPDR ETF (XLK) has achieved 12 consecutive gains, marking its second-longest winning streak since 1999, with the longest being 13 days in February 2017.

Historical Context: The current streak is not unprecedented, as it mirrors past performance trends, particularly the strong recovery following significant declines, suggesting that while the streak may end, the long-term trend could remain positive.

Broader Market Performance: The rally in the tech sector is not solely driven by large-cap stocks; smaller and equal-weight tech ETFs have outperformed XLK, indicating a broad-based strength across the sector.

Future Outlook: Following a significant decline earlier this year, the current winning streak may set the stage for further gains, although the path to higher levels is expected to involve some volatility, similar to patterns observed in 2020.

Tech Stocks Performance: U.S. tech stocks have thrived due to an AI boom, with the Technology Select Sector SPDR Fund (XLK) gaining 28% in 2024 and 56% in 2023, driven by trends like remote work, digital payments, and video streaming.

Investment Outlook: Analysts suggest that despite high valuations, there are opportunities in undervalued tech ETFs, particularly as the AI sector continues to grow and the Federal Reserve begins a rate-cutting cycle, which could further benefit growth-oriented investments.

Analyst Rating and Performance: RBC Capital Markets analyst Rishi Jaluria maintained an Underperform rating for Box Inc. with a price target of $21, despite the company reporting better-than-expected earnings and revenue for Q3. The outlook for Q4 is slightly positive but remains cautious due to ongoing privacy concerns affecting enterprise adoption.

Market Reaction and Future Guidance: Box shares fell 7.61% to $31.80 following the report, although FY25 revenue guidance was raised by $2 million, indicating improved visibility into results. The anticipated pricing uplift for the new Enterprise Advanced plan launching in January could enhance future revenue, but widespread adoption may be delayed.

Overview of Invesco S&P SmallCap Information Technology ETF (PSCT): Launched in 2010, PSCT is a passively managed ETF that provides diversified exposure to small-cap U.S. technology companies, with low operating expenses of 0.29% and a current asset size of over $313 million.

Performance and Investment Considerations: The ETF has experienced a slight decline of -2.21% recently but is up 8.57% year-to-date; it holds a Zacks ETF Rank of 1 (Strong Buy) and is considered a high-risk investment due to its beta of 1.16 and standard deviation of 25.93%.

Investment Insights: Paul Eitelman from Russell Investments highlights that small-cap managers are focusing on sectors like banks, technology, and highly indebted companies that may benefit from declining interest rates, while emphasizing the importance of stock selection over broad sector bets due to economic uncertainty.

Market Strategy: Eitelman advises a cautious approach in the small-cap space, recommending targeted sector tilts and prioritizing individual stock performance to navigate fluctuating economic conditions effectively.