With last year's COVID-friendly technology shares taking an absolute beating in the last couple of months, some experts have marked this as an opportunity to buy in.
But with the dark shadow of inflation looming, which tech businesses are "safe" to return to and which ones should we avoid?
According to Montgomery Investments chief investment officer Roger Montgomery, now is the time to be very selective about where investors park their money.
"Investing in global stocks has been particularly rewarding during 2020 and the early part of 2021. The future, however, could be more challenging and more discernment will be required. This discernment will be no more necessary than required in the tech sector," he said on the company blog.
"The next big rotation could see these over-valued – often profitless – firms dumped in favour of long-duration quality tech businesses."
Short-term volatility is the forecast
Rising inflation changes the whole game, according to Montgomery.
While he believes the world will eventually return to the pre-COVID low inflation environment, the immediate future is not so rosy for tech.
"For the next few months there is every risk that both the leading tech companies and the profitless prosperity companies are put under some pressure," he said.
"Any forthcoming volatility may be greater for the super long-duration tech set where price and sales multiples are off the Richter scale."
Taking advantage of this volatility involves putting money into the right tech shares to reduce downside risk.
Tech giants' numbers are far superior to the speculators
Montgomery thought the COVID winners still have nonsensically high valuations.
"Meanwhile Roku, Docusign Inc (NASDAQ: DOCU) and Slack Technologies Inc (NYSE: WORK) generate negative returns-on-equity."
This is why the safe bet in a rising inflation world are the well-established giants.
"Contrast these multiples to the tech giants whose combination of growth and profitability could not have been imagined by capitalism even a decade ago," said Montgomery.
"Facebook's ROE sits at 25 per cent, Apple's is 82 per cent and Microsoft 43 per cent."
The rotation away from momentum stocks has already well begun, even though these companies are merely seeing a slowdown in revenue growth.
"Witness, for example, the up-to-50% slides in Peloton Interactive Inc (NASDAQ: PTON) and Afterpay Ltd (ASX: APT), a decline of a third for Docusign and Zoom, along with slides in Appen Ltd (ASX: APX) (down 70%), WiseTech Global Ltd (ASC: WTC) and Xero Limited (ASX: XRO)," Montgomery said.
"We currently believe it is wise to tilt towards quality and away from momentum in the tech names."
Montgomery's worst fear is that inflation pokes up, and then the central banks allow it to go out of control.
"Recently, a well-connected friend told me Australia's [Reserve] Bank believes there's a 25% chance inflation could get away from them," he said.
"The idea that central banks could be 'behind-the-curve' is one markets are most nervous about."