IXN Global Tech ETF Looks Undervalued After Multiple Compression, Analyst Argues Buy Case

The Quick Take

• IXN global technology ETF now trades at a high-teens P/E after significant year-on-year multiple compression, according to a SeekingAlpha analysis.
• The ETF’s 28.5% long-term EPS growth rate and increasing international diversification support a bullish thesis despite near-term rate headwinds.
• Multiple compression driven by Fed rate hikes has created an entry point that the analyst argues is attractive on a risk-adjusted basis.

The iShares Global Tech ETF (IXN) has undergone meaningful valuation de-rating over the past twelve months as the Federal Reserve’s rate tightening cycle applied discount rate pressure to technology sector multiples. A high-teens P/E multiple represents a significant contraction from the elevated valuations that characterized the 2021-2024 AI enthusiasm period, and the analyst’s case rests on whether that compression has now overshot fundamentals given IXN’s 28.5% estimated long-term EPS growth trajectory.

IXN’s increasing international diversification is a nuanced point within the analysis. The ETF’s geographic composition has shifted to include higher weights in Asian and European technology names, which provides some insulation against US-specific regulatory risk and earnings currency effects. However, international tech exposure also introduces sensitivity to slower-growth markets and trade policy uncertainty that a pure US tech ETF would not carry. The net effect on valuation attractiveness depends on whether international tech earnings quality is improving or deteriorating relative to US peers.

Watch IXN’s price action relative to QQQ and SOXX as the rate cycle evolves. If the Fed signals a pause or end to hikes, global tech ETFs with international diversification like IXN may outperform the more US-concentrated QQQ as non-US tech benefits from the dollar’s potential softening. The macro variable is the persistence of AI capex spending by hyperscalers: sustained capex commitments would support semiconductor and infrastructure component earnings that underpin IXN’s growth rate.

Synthesized from 1 source.