Deutsche Bank Thematic Research: DB CoTD — Tech Civil War
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Key Views
At the end of October 2025, the two subsectors held relatively balanced weights in the S&P 500: semiconductors/equipment at 15% (42% of tech) and software/services at 12% (34% of tech). By July 9, 2026, this dynamic had reversed dramatically. Semiconductors/equipment rose to 18% of the S&P 500 (48% of tech), while software/services declined to just 8% of the S&P 500 (23% of tech).
This divergence is historically remarkable. The two subsectors have traditionally been highly correlated, yet their rolling 3-month correlation has plummeted to near 0%.
The market increasingly treats most software as a "legacy asset," aggressively reallocating capital toward the hardware layer. Although hardware has softened somewhat in recent weeks, the overarching trend remains intact.
Outlook
The report does not provide explicit forecasts, ratings, target prices, or time horizons. It also notes that emerging market ETFs now carry concentrated tech exposure but does not elaborate further.
Recommended Securities
No specific securities are recommended.
Key exhibits
Exhibit 1
Exhibit 2
