Edited by the Korea IT Times editorial team.
Amid escalating geopolitical tensions in the Middle East, global financial markets are reevaluating their exposure to risk-heavy assets. While sectors like energy, transportation, and manufacturing face immediate threats from potential supply chain disruptions and volatile oil prices, the technology industry appears to be comparatively insulated, at least for now.
Nigel Green, CEO of deVere Group, one of the world's leading independent financial advisory and asset management firms, emphasizes the current resilience of big tech. “Right now, large-cap US tech is the most shielded major sector in the market from war fallout,” he notes. According to Green, this resilience stems from several core factors—tech firms boast stable earnings, robust balance sheets, and limited dependencies on commodities or vulnerable international trade channels.
However, Green cautions that “shielded doesn’t mean immune,” highlighting the nuanced risks that still loom. While sectors reliant on physical goods and raw materials are feeling immediate impacts from rising geopolitical tensions, tech giants—particularly the so-called Magnificent 7: Apple, Microsoft, Alphabet, Amazon, Meta, Nvidia, and Tesla—continue to operate with minimal direct impact. Their revenue streams, largely driven by digital platforms, artificial intelligence, cloud infrastructure, and software ecosystems, are less intertwined with physical logistics or international commodities.
“Tech’s underlying business models are far more resilient in conflict scenarios than those tied to physical goods or fossil fuels,” Green explains. “This is a sector powered by data, not diesel.” This inherent insulation has helped sustain the sector’s stability amidst broader market jitters, with major indices like the Nasdaq holding relatively steady compared to other global benchmarks. Simultaneously, safe-haven flows into U.S. Treasuries and the dollar have yet to trigger significant sell-offs within tech-heavy portfolios.
Nonetheless, Green warns that sentiment could turn the tide. “If markets begin to unravel because the U.S. is pulled directly into military conflict, the danger isn’t that tech’s earnings collapse—it’s that widespread de-risking kicks in,” he states. “In such environments, the sector’s sheer size and ownership concentration could become a liability.” Currently, technology accounts for over 30% of the S&P 500 and a still larger share within institutional portfolios and index funds, making it the most crowded trade globally.
This concentration increases the risk of forced liquidation. “When large funds need to raise cash quickly, they often sell what they can—regardless of valuation,” Green remarks. “That includes big tech.” He further explains that timing influences outcomes—asynchronous escalation or conflicts outside trading hours could trigger automated, algorithmic selling, thinning liquidity and widening price gaps—even for fundamentally strong companies.
Despite these risks, Green underscores the sector’s comparative resilience, noting that tech firms are not preoccupied with hedging commodity exposures or rerouting supply chains. Yet, he recognizes that even the most robust companies are not entirely immune to market panics. Certain segments of the tech industry might even see opportunities during such downturns. As demand for cybersecurity, secure communications, AI-enabled intelligence, and cloud services could spike amid escalating conflicts, firms with ample cash reserves—such as Apple, Microsoft, and Alphabet—may leverage market downturns to buy back stock, expand their market share, or invest in long-term innovations.
Green concludes with a note of prudent oversight. “It’s not just about what these companies do but also how the market treats them during stressful times,” he says. “Being fundamentally strong won’t always shield you if everyone starts running for the exits.” His advice to clients is to maintain exposure to quality tech stocks but with careful consideration of concentration risk, liquidity stress-testing, and avoiding excessive leverage.
“Tech remains the most resilient part of the modern market,” Green affirms, “but it’s also the largest; when the herd moves, even the strongest can get dragged along for the ride.”
