American tech stocks have reasserted their role as a market safe haven, as easing tensions between Washington and Tehran trigger a sharp rebound across beaten-down AI and software names.
A two-week ceasefire between the US and Iran, alongside a potential reopening of the Strait of Hormuz, has already sparked a relief rally.
The Nasdaq jumped 3.5 per cent following the news, while the Dow gained over 1,300 points, with mega-cap tech leading the way.
Investors seem to be rotating back into growth sectors now, following months of war-driven volatility pushing capital into oil, defence and other ‘hard asset’ plays.
Tech as a defensive trade
Even before the ceasefire, US tech was the only S&P 500 sector to rise following the outbreak of hostilities, as investors sought shelter in firms with strong balance sheets, and limited exposure to energy stocks.
The so-called Mag Seven have increasingly been viewed “like countries” in scale and resilience, as a place to park capital when macro uncertainty spikes, said Christian Muller-Glissmann, head of asset allocation research at Goldman Sachs.
“I often hear from clients like the Magnificent Seven are like a safety asset”, she confirmed.
Falling oil prices, with Brent crude dropping nearly 16 per cent, are easing inflation expectations and reviving hopes of Federal Reserve rate cuts.
That becomes a key tailwind for tech valuations, which had come under pressure as yields rose during the conflict.
Analysts at Wedbush said the ceasefire creates a clear ‘risk on’ backdrop for the sector as a whole, arguing that recent geopolitical stress had left tech stocks oversold.
AI giants lead rebound
The rebound follows a bruising start to the year for the industry. The Magnificent Seven have together shed over $1.1 trillion in market value since late February, with every name down double digits from recent highs.
Microsoft alone slumped more than 20 per cent in the first quarter, while Meta and Alphabet also suffered steep declines.
Much of the sell-off was driven by rising oil prices, which reignited inflation fears and threatened to delay rate cuts, which form a critical support for growth stocks.
Meanwhile, investors had begun to question whether mass AI investment would translate into near-term returns, adding further pressure to valuations.
But now, Meta, Amazon, Alphabet and Nvidia, have all rallied on the ceasefire news, alongside a broader surge in chipmakers.
Taiwan Semiconductor Manufacturing rose six per cent, while Intel jumped 11 per cent, and Applied Materials gained around nine per cent.
“Valuation of tech as a sector is at the bottom right now”, said Seth Basham at Wedbush, describing the current environment as an opportunity for investors to re-enter the space.
But for some on Wall Street, the bigger risk is missing the longer-term AI story. Wedbush analyst Dan Ives said investors focusing too heavily on geopolitical shocks risk overlooking “generational tech winners”, pointing to companies such as Tesla and Apple as central to the next phase of the AI economy.
He expects the global AI market to reach $5 trillion in value within the next 12 to 18 months, arguing the opportunity remains “massively underestimated”.
Elsewhere, cybersecurity is also emerging as a key beneficiary, with firms like CrowdStrike and Palo Alto Networks potentially seeing gains of up to 40 per cent over the next year.
A fragile safe haven
Still, the safe haven narrative is not without risk. The ceasefire remains temporary, shipping through the Strait of Hormuz has yet to fully normalise, and geopolitical tensions could quickly resurface.
Any renewed spike in oil prices would likely revive inflation fears and weigh on tech valuations once again.
But for now, markets are taking the off-ramp, and after months of war-driven rotation away from growth, investors are once again treating US tech as one of the most reliable corners of the market.
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