On the Aug. 31, 2026, episode of The Morning Filter podcast, hosts Susan Dziubinski and Morningstar Chief US Market Strategist Dave Sekera discuss why the tech sector has historically underperformed in September and talk about two 2-star-rated stocks to avoid. Here is an excerpt from the show.
Why September Could Be Tough for Tech Stocks
Susan Dziubinski: Dave, let’s pivot to stocks to sell in September, all of which are from sectors that have historically underperformed during the month. We’ll talk tech first. Why is this one to tread lightly in September?
Dave Sekera: As you would expect, if you have any kind of market selloff, the high-growth stocks, in particular tech, usually sell off the furthest and the fastest to the downside. I think that’s why tech would be one you probably want to tread lightly on. There are still individual AI names we like, but if you had the market sell off, that sector would probably sell off the most.
And then I’d also just note here that if we did have any kind of increase in interest rates, that’s certainly been on the radar. If the 10-year were to start hitting a five-handle and go over 5%, my big concern with the tech sector is because it’s generally growth stocks, which have very long duration. If you start discounting that free cash flow at higher rates, that naturally lowers the present value you’d be willing to pay for those stocks today.
Why SanDisk and Ciena Look Like Overvalued Stocks to Avoid Today
Dziubinski: You have two stocks that you’re suggesting selling in September from the tech sector. Both look way overvalued, and we’ve talked about these both before as sells: SanDisk SNDK and Ciena CIEN. Remind us why they’re sells today.
Sekera: Just taking a look at the valuations of these two stocks. SanDisk is a 2-star-rated stock and trades at almost a 50% premium over fair value, and that’s already after hitting its highs and starting to roll over. It’s a company we give a Very High Uncertainty Rating and no economic moat.
Sienna is a similar story, a 2-star-rated stock with a 40% premium and Very High Uncertainty. We do rate it with a narrow economic moat. When I look at the two companies, I still think they’re just generally commodity-oriented tech hardware. At some point, supply’s going to end up catching up with the demand.
A lot of these companies are already redesigning or redeploying a lot of their assets to increase supply for products with the highest margins and the most demand. A lot of these companies are already building new capacity and facilities. In fact, our analyst team is forecasting that 2028 will be the peak as far as earnings for all of these tech commodity-type companies.
In this case, the upside leverage you’ve been experiencing out to the upside is going to work the exact opposite to the downside at some point. Once you have enough supply, prices are going to fall, margins are going to contract. I think earnings drop like a rock, and on top of that, you’ll have multiple contractions at the same time.
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