Tech sector posts quarterly gains as AI momentum continues

The technology sector (XLK) gained nearly 2.75% in the third quarter as strong demand for artificial intelligence and continued investment in AI infrastructure supported major technology stocks.

In the third quarter, tech giants Nvidia (NVDA), Microsoft (MSFT), Meta Platforms (META) and Apple (AAPL) gained 14.13%, 37.5%, 28.74%, and 15.08%, respectively.

Julian Lin, Investing Group Leader for Best Of Breed Growth Stocks, said that the tech sector appears to be positioning for another AI trade as the rise of personal agents like Muse may have brought investor attention back to the long-term winners and losers in AI.

“I have a hunch that we may see a re-run of the SaaS Apocalypse from earlier this year, as well as a return in the AI momentum trade,” Lin added.

Technology sector scorecard

• Sector Return: +2.75% quarter-to-date
• Best Performer: Everpure (+80.17%)
• Top Detractor: Fair Isaac (-51.20%)

Top tech performers of the quarter

On the individual stock front, Everpure (P) was the biggest winner in the third quarter, rising more than 80% as the company unveiled a broader growth strategy and issued a preliminary FY28 outlook that topped analyst revenue expectations.

Lin argued that Everpure's 80% run was an AI infrastructure re-rating, as September's analyst meeting looks like a strategy relaunch - a preliminary FY28 revenue guide of $7.0–7.3B, well above consensus, aimed squarely at hyperscale and AI data workloads.

“This is no longer just a storage-box story; the stock is being priced as a data-management platform — but at roughly 140x trailing earnings with negative quarterly free cash flow, that FY28 guide may have raised the stakes,” Lin noted.

It was followed by Hewlett Packard Enterprise (HPE), which gained nearly 57% in the third quarter. Accenture (ACN) ranked third, rising about 55.6%.

Lin highlighted that a record quarter did the heavy lifting for HPE: $12.2B revenue, the first $1+ non-GAAP EPS, and a raised FY26/FY27 outlook, with Juniper-powered networking revenue up 75% and a record $7.6B AI backlog.

“Then two landmark deals followed: Oracle deploying HPE Juniper networking across its AI data centers at gigawatt scale and a $1.2B AMD Helios AI rack order from Vultr. With a lot priced into the stock, investors might want to consider that supply constraints through 2028 mean the record backlog still has to ship - from here it's about execution,” he added.

Here are the top gainers of the quarter:

• Everpure (P): +80.17% — Quant rating: Strong Buy, with a score of 4.94 out of 5
• Hewlett Packard Enterprise (HPE): +57.05% — Quant rating: Strong Buy, with a score of 4.99 out of 5
• Accenture (ACN): +55.66% — Quant rating: Hold, with a score of 3.21 out of 5
• Super Micro Computer (SMCI): +51.21% — Quant rating: Hold, with a score of 3.48 out of 5
• Cognizant Technology Solutions (CTSH): +46.23% — Quant rating: Hold, with a score of 3.30 out of 5

Top tech detractors of the quarter

Fair Isaac (FICO), which lost nearly 51.2%, was the biggest detractor of the quarter after Federal Housing Director Bill Pulte directed Fannie Mae and Freddie Mac to allow all lenders to use the competing VantageScore credit-scoring system.

Lin argued that after FHFA Director Pulte issued an early-September directive approving all lenders for VantageScore, the rise of personal AI agents like Muse may have brought back fears of another SaaS apocalypse 2.0.

First Solar (FSLR) ranked second, slipping nearly 21.7%, as high borrowing costs add pressure to an industry that depends heavily on project financing.

“First Solar appears to have been hit hard by rising rates - the 10-year shot up to its highest level since 2007 - but there also was the new tax law that sped up the phase-out of the solar credits that made those projects pencil in the first place. At around 9x earnings the stock might look cheap, but it bears remembering that the forward numbers can deteriorate quite rapidly if things get worse,” Lin concluded.

In the third quarter, Corning (GLW) and International Business Machines (IBM) also fell 21.3% and about 20%, respectively.

Here are the top detractors of the quarter:

• Fair Isaac (FICO): -51.20% — Quant rating: Hold, with a score of 2.55 out of 5
• First Solar (FSLR): -21.67% — Quant rating: Hold, with a score of 2.99 out of 5
• Corning (GLW): -21.27% — Quant rating: Hold, with a score of 3.27 out of 5
• International Business Machines (IBM): -20.07% — Quant rating: Hold, with a score of 2.92 out of 5
• Fidelity National Information Services (FIS): -20.05% — Quant rating: Sell, with a score of 2.21 out of 5