Like wayward delinquents, tech companies have managed to win approval lately by not screwing up too much.

With expectations already dim, investors gave hardware and chip companies a big pat on the head -- since April 1 Intel ( INTC) is up 19% and the Philadelphia Stock Exchange Semiconductor Index (SOX) has risen 17% -- just for managing to deliver first-quarter earnings on target. This despite the fact that those numbers showed little growth. Software outfits have likewise enjoyed price spikes, even after a rash of earnings warnings for the quarter.

Looking forward, many on Wall Street say sentiment may have raced ahead of results and is beyond the outlooks for second-quarter hardware sellers. One worry is that an inventory correction may be looming that could make this quarter a repeat of last year, when the SOX dropped 36%.

There is some strength elsewhere in tech -- storage and some pockets of software, like security and business intelligence, which bucked the trend of weaker software earnings with solid growth.

"First-quarter earnings look pretty good. In my opinion, that's what drove this rally. But the sales and the sales outlook for hardware we think are not very good," says Jerome Dodson, manager of the $294 million ( PARNX) Parnassus fund, which at the end of March claimed a hefty 38% stake in hardware and 8% of assets in software.

Tech giant IBM ( IBM) managed to hoist first-quarter sales a mere 4% from last year (when adjusted for the dollar's fluctuation), even though its purchase of PwC helped boost services sales by 15%. Revenue stayed flat at Intel and slid 4% at Cisco ( CSCO).

Microsoft ( MSFT), a welcome exception, saw sales rise 8%. But it also delivered guidance below expectations for its upcoming fiscal year.

Dodson says he's "substantially reducing" his stake in tech, unsettled by the sharp stock price rises against a touchy economic backdrop. "In the longer term I'm positive on the American economy, but we keep losing jobs. Over the next six months I think we're in for rough sledding."