Feature article: Tech sector outlook | Small cap finding support at COVID-19 levels The past year has been a challenging period for UK technology stocks. The sector has diverged from buoyant UK blue chips due to the perceived threats of AI-induced disruption. This underperformance has been regardless of generally positive trading news, and larger cap software & services companies have performed significantly worse than their smaller brethren. Takeovers have continued to pick off the remaining companies while the IPO market has been effectively shut, resulting in a significant reduction in supply; ca.£38bn has been removed from the software and services sector since the COVID-19 pandemic began – which is equivalent to the market capitalisation of the remaining companies. Given the positive trading news, generally healthy balance sheet positions, supply reductions, and with small cap software & services companies now hovering around their pandemic-period lows, we believe the sector warrants a closer look.