Bets that the Federal Reserve will continue cutting interest rates have fueled a rally in one of the riskiest corners of the technology sector, raising concerns about a potential reversal in the stocks.
A basket of unprofitable tech companies tracked by UBS Group AG has jumped 22% since the end of July, compared with a 2.5% advance for its profitable counterpart and the Nasdaq 100 Index’s 5.9% advance. The run-up has sent the group, which includes lesser-known companies like SoundHound AI Inc. and Unity Software Inc., near its highest since late 2021, when rock-bottom interest rates were fueling a bubble in speculative assets that popped the following year.