Randy Gwirtzman It's really interesting. There's I would say, three factors that are kind of driving this right now. The first is there's an under allocation to small and big cap stocks right now. As my analytics group kind of pulled up, if you look at the overall allocation of Smid to the overall Russell 3000, it's about 3% allocated now to that total equity group. Typically it's 7.5%. So clearly under allocated. The second is you know, the valuations are pretty reasonable on a forward basis. Small cap sto ...

Core Viewpoint - The tech sector is experiencing a shift as investors are increasingly focusing on small and midcap stocks, moving away from mega cap tech dominance, driven by underallocation, reasonable valuations, and better growth prospects in smaller companies [1][2][3][5]. Group 1: Market Dynamics - There is a notable underallocation to small and midcap stocks, currently at about 3% of the Russell 3000, compared to a typical allocation of 7.5% [3]. - The Russell 2500 growth index is trading at approximately 21.5 times earnings, which is below the S&P 500's typical range of 15 to 17 times over the past 20 years [4]. - Small cap stocks are projected to grow at a forward sales rate of about 16%, compared to 11% for the S&P 500, indicating a potential for better growth in smaller companies [5][6]. Group 2: Economic Environment - The current economic environment, characterized by low inflation and potential GDP growth of around 5%, is favorable for small cap stocks [6][7]. - Increased productivity is helping to keep wage-push inflation down, and tariffs have not significantly impacted the market [8]. Group 3: Sector Performance - Investment is shifting from software to hardware and semiconductor sectors, particularly benefiting companies involved in AI data center buildouts, with capital expenditures expected to rise from $200 billion in 2024 to $650 billion in 2025 [11][12]. - Software companies are facing challenges, with an average decline of 20% year-to-date and a 40% drop in small cap software over the past year [12][13]. Group 4: Investment Opportunities - Companies like Data Dog and Dinatrace are highlighted as strong investments due to their embedded roles in network infrastructure and high free cash flow growth [15][16]. - In healthcare, companies like Tempest AI are leveraging AI for cancer diagnostics, creating unique databases that enhance drug development [21][22]. Group 5: Broader Market Implications - A broadening market, with increased investment in small and midcap stocks, is seen as healthy for the overall economy, potentially benefiting consumer spending [30][31]. - The disconnect in valuations between small and large cap stocks is historically significant, suggesting potential for growth in the small cap sector [32].

Core Viewpoint - Axon Enterprise, Inc. (NASDAQ:AXON) is highlighted as a strong investment opportunity due to its consistent growth and market presence in the public safety sector, particularly with body cameras and tasers [1][2]. Group 1: Analyst Insights - Michael Landsberg from Landsberg Bennett Private Wealth Management identifies Axon Enterprise as a top non-tech stock, emphasizing its growth potential and market dominance in public safety products [1]. - Axon Enterprise is noted for its significant growth rate of approximately 30%, indicating robust demand for its products [1]. - ClearBridge Growth Strategy mentions that Axon complements existing defense holdings, suggesting a strategic alignment with growth in aerospace and public safety markets [2]. Group 2: Market Position and Growth Potential - Axon Enterprise is recognized as a dominant player in its industry with substantial opportunities for growth and margin expansion [2]. - The company’s products, such as body cameras, are ubiquitous in law enforcement, reinforcing its market presence [1]. - The investment community acknowledges the potential of Axon, although some analysts believe that certain AI stocks may offer higher returns [2].