Are Technology Stocks Cheap Now?
The tech sector started 2025 and 2026 significantly underperforming the rest of the market, setting up what Goldman Sachs Research calls a “technology value opportunity.”
Technology stocks have fluctuated since the start of 2025, weighed down by concerns about the impact of artificial intelligence (AI) and investors questioning returns on high spending by the biggest technology companies. In addition, the market is re-rating many “old-economy” capital-heavy companies in tandem with the rising importance of physical infrastructure.
At the beginning of this year, these worries culminated in a sell-off of technology stocks as fears spread about AI disrupting the business models of established software companies.
The upshot, according to Peter Oppenheimer, chief global equity strategist in Goldman Sachs Research, is that the global technology sector has so far in 2026 had one of its weakest periods of relative returns in the last 50 years relative to global stocks.
“The underperformance of the technology sector is starting to generate attractive opportunities for investors as its valuation, relative to expected consensus growth, has fallen below that of the global aggregate market,” Oppenheimer writes in a report dated April 7.
Why have tech stocks underperformed over the last year?
Several factors have contributed to the relative weakness of parts of the technology sector since 2025 and the selloff at the beginning of 2026, Oppenheimer writes.
First, the massive increase in capital expenditures (capex) by the biggest US technology companies has raised concerns about how big a return they can generate on their investment.
“The history of technology breakthroughs, from the steam engine to railways, PCs and the internet, is littered with examples of new technologies that attracted large sums of capital to build out underlying infrastructure which have led, ultimately, to low returns,” Oppenheimer writes.
In these instances, the benefits of this investment were then enjoyed by other companies, he adds.
Investors are also worried that the sums spent by some tech giants are starting to eat into cash flows and balance sheet capacity, forcing companies to raise capital or lay off workers, for example.
“That said, although the debt ratios for the sector have risen (the sector was previously net cash), they remain relatively low,” Oppenheimer points out.
