Higher tech valuations supported by more accommodative Fed: BakerAvenue's Lip
Summary
King Lip of BakerAvenue Wealth Management discusses the 2026 tech outlook on CNBC's Closing Bell. He remains bullish on tech and big tech, citing mid-20s earnings growth, a more accommodative Fed, and favorable January seasonality for the Nasdaq. He also sees recent cash-funded tech M&A as a signal that big tech believes its shares are undervalued. Alphabet is highlighted as a top pick, with Gemini integration, Waymo, YouTube, and January seasonality cited as tailwinds.
- King Lip expects 2026 to be another banner year for tech.
- Tech earnings growth is seen in the mid-20s, highest among S&P 500 sectors.
- He assumes one or two more Fed rate cuts and a Fed focused on jobs.
- January seasonality is cited as historically strong for the Nasdaq and tech.
- Recent cash-funded M&A is viewed as a confidence signal for big tech.
- Alphabet is highlighted as a top pick due to Gemini, Waymo, YouTube, and seasonality.
- The host notes chip stocks like Nvidia, Micron, and Intel started the year strong.
- The video ends with a discussion of YouTube's value within Alphabet.
Ideas
Tech tailwinds too strong to ignore
2026 is shaping up to be another banner year for tech, with earnings growth in the mid-20s—the highest of any S&P 500 sector—and an accommodative Fed that is expected to cut rates one or two more times and is more focused on job growth than fighting inflation. He says the tailwinds for big tech are too strong to ignore and that managers are overweight tech.
Nasdaq January seasonality favors longs
January and the first quarter are typically very strong for tech and the Nasdaq. He cites a 70% historical win rate for the Nasdaq in January with an average gain of 2.3%, supporting a tactical long into the seasonally strong period.
Alphabet's Gemini turns threat into growth
Alphabet is more than a search box; it successfully wove Gemini into Google Search, turning AI search from a potential threat into a growth engine. It enters 2026 with diversified tailwinds including Waymo and YouTube, and historical January seasonality—Alphabet is up about 80% of the time in January—supports the top-pick view.
