(Bloomberg) --Wall Street doesn’t expect technology stocks to repeat 2017’s banner year that has seen the sector return almost twice as much as the S&P 500 index. After four consecutive years of outperformance, tech companies face mounting concerns about the potential for increased government regulation and continued rotation by investors into higher-taxed industries as a result of U.S. tax reform. Most analysts see the bull market continuing, but at a less ferocious pace. Here’s a look at their predictions.

J.P. Morgan
Recommends underweight technology exposure in 2018 While fundamental drivers for technology stocks remain intact with significantly stronger organic growth compared to the S&P 500, the sector faces headwinds from tax-driven rotation out of growth and into value, along with crowded investor positioning Still early in the rotation cycle as investors hold off on re-positioning until there is certainty on details of U.S. tax reform.

Morgan Stanley
Remains overweight on FAANG megacap bloc that consists of Facebook Inc., Apple Inc., Amazon.com Inc., Netflix Inc. and Google parent Alphabet Inc., though “history indicates returns may moderate and we question whether growth over value can continue to be as meaningful a driver of returns” Macro factors “raise some yellow flags” as the U.S. market is in a 10-year growth over value run, the longest in Morgan Stanley’s data going back to 1970 Alphabet, Amazon and Apple are most exposed to a potential U.S. consumer-led recession in 2018 in terms of percentage impact to revenues Netflix Inc. and Amazon would likely see the greatest reduction in value in the event of a slowdown in the economy.

Recommends “modest overweight” exposure to tech stocks entering 2018 with valuations remaining attractive compared to the historical averages; on an equal-weighted basis, relative multiples have fallen in 2017 as appreciation has been fueled entirely by earnings growth Spending outlooks in surveys point to “robust” tech spending in 2018 and revenue growth is expected to be more than twice the overall market Offshore cash repatriation as a result of tax reform could lead to more share buybacks from tech companies, which hold more than 60 percent of cash held overseas among S&P 500 companies despite accounting for only 22 percent of earnings.

Expect revenue growth trends for the top large-cap internet companies to continue with steady multiples Large cap stocks’ outperformance has been almost entirely driven by earnings, which means there’s “a lot of downside protection” Key themes for the year ahead include a further shift to mobile, “social ubiquity,” increased video consumption, faster delivery of goods, cloud computing and growing cash on the balance sheet; potential for increased government regulation is a wildcard Top large-cap long picks for 2018 are Facebook, Netflix and Amazon; top small-cap long picks are Yelp Inc., TrueCar Inc. and Zillow Group.

Top investment theme for internet companies in 2018 is video advertising, where Facebook is best positioned Alphabet should benefit from YouTube over time, but there are concerns about recent “brand safety” issues Amazon is the “dark horse” in advertising and will probably be a major player in the future if it opens up Prime Video to ads Twitter Inc. is making gains with its live video ad initiatives and could be a “surprise performer” next year.

Expects 2018 to be less favorable for FANG stocks with risk related to the FCC’s decision to end net neutrality; content distributors could bear a greater share of total cost of the internet Still recommends technology stocks but they will be led by non-FANG companies Favorites include Adobe Systems Inc., Intuit Inc., Harris Corp., Motorola Solutions Inc., Automatic Data Processing Inc., Fidelity National Information Services Inc., Alphabet, International Business Machines Corp., KLA-Tencor Corp., Lam Research Corp., Nvidia Corp., Texas Instruments Inc., Xilinx Inc.

Evercore ISI
Expects trend of “big getting bigger” will remain a significant driver of outperformance in 2018 for top picks including Facebook, Amazon and Alphabet Facebook has potential to outperform amid “muted” expectations from some investors related to consequences of decelerating revenue growth and shrinking operating margins Netflix is well positioned to handle threat from Walt Disney Co.’s acquisition of 21st Century Fox Inc. assets; expects Netflix’s content to continue to drive engagement.

BofA Merrill Lynch
Survey of fund managers found allocations to technology stocks fell to 24 percent overweight, the long-term average; the reading was the lowest “z-score” for the sector, a measure of extreme positioning, in three and a half years Tech saw multiple contraction in November, with a valuation model pointing to more than 10 percent upside should the sector’s relative forward price-to-earnings revert back to historic average Tech continues to rank highest of the 11 sectors in BofAML’s momentum and value quant model.

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