The high-flying US technology trade, a major driver of global equity performance, is now “getting long in the tooth,” according to Lyn Alden, founder of Lyn Alden Investment Strategies. In an interview with CNBC-TV18, Alden expressed caution toward the sector, suggesting that while a major crash isn’t imminent, US tech stocks are likely to see weaker performance in 2026 compared to 2025.

Alden pointed to several factors behind this view, noting the market is beginning to price in realistic headwinds. “The market's starting to price in some realistic concerns… mainly the serious capex that they're going to have to do and kind of the valuation adjustment around that,” she explained.

She also highlighted a shifting narrative around market leadership, particularly concerning Nvidia. “The market is realizing Nvidia might not be the only game in town,” she said, pointing to promising developments in chips from companies like Alphabet (Google). Alden noted she had previously viewed Alphabet as a ‘laggard to buy,’ but believes that trade is now largely played out following its recent rally.

Potential Rotation to Emerging Markets

With US tech potentially slowing, Alden discussed a possible shift in capital allocation toward underperforming markets. For much of this year, her preference has been for other emerging markets, such as those in Latin America.

“India has been a laggard this year. I am somewhat more optimistic about India next year going forward,” she stated regarding 2026. Her earlier caution on India was primarily due to valuation concerns. She observed that markets with a higher sensitivity to a weaker US dollar have performed well, whereas India's correlation has been less direct.

Central Bank Volatility and Liquidity Pressures

Alden also commented on the “unusual volatility” surrounding major central banks, particularly the US Federal Reserve and the Bank of Japan (BoJ). She noted that markets were surprised by how hawkish the BoJ might become, leading to rising Japanese yields and a weaker yen.

“I do think that the Bank of Japan is going to get slightly more hawkish here,” she said, but cautioned that Japan’s ability to hike rates is limited by ‘fiscal dominance’—its very high public debt-to-GDP ratio. To smooth any disorderly market moves, Japan could potentially sell a portion of its substantial holdings of US Treasuries, she added.

In the US, Alden pointed to underlying liquidity strains, citing recent spikes in secured financing rates and activity in the Fed’s standing repo facility. Although the Fed has ended quantitative tightening, she believes it “probably still has more liquidity provision to do to fully put out those fires.”

She concluded that the combination of tight US domestic liquidity and a hawkish tilt from the Bank of Japan is likely contributing to the recent weakness in certain global markets, particularly liquidity-sensitive assets like Bitcoin and other cryptocurrencies.