While growth in companies’ projected earnings has been revised up almost continuously across many sectors of the economy in recent years, the gap in expected profit growth between technology firms and others has persistently widened. As a result, security analysts’ projected five-year growth of earnings for technology companies now stands nearly double that for the remaining S&P 500 firms.
To the extent that there is an element of prescience in these expectations, it would reinforce the notion that technology synergies are still expanding and that expectations of productivity growth are still rising. There are many who argue, of course, that it is not prescience but wishful thinking. History will judge.