In short: tech stocks are rallying because rate-cut bets by the Fed make future growth more valuable, and that’s especially powerful for high-growth, capital-intensive tech companies. But there are a few more layers to it. Here’s a breakdown:

Why Fed Rate-Cut Expectations Fuel a Tech Rally

Lower Discount Rates

When interest rates go down, the discount rate applied to future cash flows falls. Growth companies (like many in tech) derive much of their value from earnings far in the future. Cheaper rates make those future earnings more valuable in present terms.

Cheaper Capital for Expansion

Many tech firms, especially in semiconductors or AI-infrastructure, need a lot of capital to scale – building fabs, R&D, data centres, etc. Lower rates reduce their cost of borrowing, making these huge investments more attractive.
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AI and Structural Growth Tailwinds

The narrative around AI continues to drive strong investor demand. If the Fed is cutting, there’s an assumption that stimulus could support continued capital investment into AI infrastructure (like chips), which benefits these companies.

Risk Appetite & “Duration” Plays

When markets expect rate cuts, investors tend to favor “risk-on” assets — i.e., growth again — because the macro backdrop is seen as more supportive. High-beta tech names tend to benefit the most from that kind of risk-on environment.

Treasury Yields Down → Stocks More Attractive

As rate-cut expectations rise, yields on Treasuries fall. That makes fixed income less appealing, pushing money into equities, especially growth stocks.

Validation from Fed Officials

Key Fed figures (like NY Fed President John Williams) have made comments that markets interpret as “dovish” / open to cutting, which increases the confidence that a cut is coming.


Liquidity Boost

Easier monetary policy = more liquidity in the system. That helps risk assets like tech, because there’s more “fuel” to drive investment into high-growth areas.

Risks / Things to Watch

Valuation Risk: Even though growth is powerful, tech valuations are already high. If cuts don’t materialise, or if earnings disappoint, the rally could reverse.

Fed’s Caution: Just because markets are pricing in a cut doesn’t guarantee the Fed will deliver aggressively; they may still be cautious about inflation.

Economic Data: If economic data surprises to the upside (strong jobs, inflation), that could reduce the chance of rate cuts, hurting the rally.

Tech Earnings: For many tech firms, the rally depends on continued strong earnings, especially from AI-capex; if that slows, the argument for “lower rates justify higher valuations” weakens.

Bottom line:
Tech is leading the rally because rate-cut expectations are making future growth more attractive, capital cheaper, and risk assets more favorable. Given how much of tech’s value comes from future earnings and heavy investment, it’s one of the biggest beneficiaries when markets believe the Fed will ease monetary policy.

BIG Question , WHY have the BOE not done the same????????