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Tech Stocks Cheap: Goldman Sees Buying Opportunity
7 Apr
Summary
- Technology stocks show record divergence between earnings growth and performance.
- Goldman Sachs notes tech valuations have fallen below global market averages.
- AI and hyperscaler spending are factors in tech sector's underperformance.
As of April 7, 2026, technology stocks are presenting an attractive buying opportunity, according to Goldman Sachs. The sector has endured one of its weakest periods of relative returns over the past 50 years since 2025, prompting investors to shift towards value stocks.
Several factors have contributed to this trend, including the release of Chinese AI models like DeepSeek and substantial capital expenditure by US hyperscalers. AI-driven disruption in the software industry has also played a role. Consequently, the valuation premium for US hyperscalers has diminished, aligning closely with the broader tech sector.
Globally, the IT sector's price-to-earnings ratio now lags behind those of discretionary, staples, and industrials sectors. Goldman Sachs observed that the technology sector's valuation, relative to expected growth, has fallen below the global aggregate market average. This underperformance, coupled with the sector's relative insensitivity to economic growth and potential benefits from rising bond yields, suggests a defensive quality in the coming months.
Despite these depressed valuations, technology earnings have demonstrated robust growth. For the first quarter, IT earnings per share within the S&P 500 are projected to grow by 44%, accounting for a significant portion of the index's total earnings growth. Earnings revisions for the IT sector have been more positive than for any other sector, resulting in a record disparity between stock performance and underlying earnings expansion.
