Technology stocks have had a rough stretch. Goldman Sachs thinks that is exactly the point.
In a research note published April 7, Goldman Sachs strategists led by Chief Global Equity Strategist Peter Oppenheimer, argued that the sell-off in tech has pushed valuations to levels not seen in decades, creating what they described as a buying opportunity for investors willing to look past near-term concerns.
How bad tech stock underperformance has been
The scale of the sell-off provides the foundation for Goldman’s argument. The Roundhill Magnificent 7 ETF, which tracks Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla, has slid roughly 11% for the year, according to The Daily Upside.
Goldman’s own analysis of returns data going back to 1973 found that the current period of tech underperformance ranks among the weakest on record for World Tech versus the rest of the global market, Benzinga reported.
Meanwhile, Goldman’s basket of capital-intensive “HALO” stocks, including utilities and manufacturing companies, has gained about 11% year to date. The contrast captures how sharply capital has rotated away from tech and into traditional sectors.
What Goldman says is driving the tech de-rating
Oppenheimer’s team identified three forces behind tech’s decline. The first is concern about the scale of capital expenditure by the major cloud companies, which have collectively committed over $700 billion to data center expansion. Investors are questioning what returns those investments will ultimately produce.
Oppenheimer acknowledged the historical basis for those concerns. “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,” he said.
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“The gains are then enjoyed by other companies, many of which piggyback off the original investment,” he added.
The second force is broader fear of AI disruption to existing business models. The third is a rotation into value and old-economy stocks as investors repositioned around energy and infrastructure themes tied to the Iran war and data center buildout.
Why Goldman thinks the sell-off has gone too far
“The underperformance of the technology sector is also starting to generate attractive valuation opportunities for investors as its valuation, relative to expected consensus growth, has fallen below that of the global aggregate market,” Oppenheimer said.
The valuation picture is striking. The dominant tech companies, including Nvidia, Apple, Alphabet, Microsoft, and Amazon, currently trade at an aggregate two-year forward price-to-earnings ratio of around 20 times. That compares to roughly 52 times at the peak of the dot-com bubble in 2000.
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“Globally, the IT sector now has a P/E below consumer discretionary, consumer staples and industrials,” Oppenheimer noted.
Earnings, meanwhile, have held up. Goldman expects the information technology sector to grow earnings per share by 44% in the first quarter of 2026, accounting for 87% of total S&P 500 EPS growth in that period.
The bank also estimates that AI infrastructure investment alone will contribute roughly 40% of S&P 500 earnings growth this year, according to Investing.com. Return on equity for tech stocks remains high, and earnings revisions are more positive than for any other sector, Oppenheimer added.
Key points from Goldman’s research note:
- Tech’s relative underperformance is among the worst on record since 1973, per Goldman’s own data.
- The Magnificent 7 ETF has slid roughly 11% year to date.
- Tech’s forward P/E of around 20x is less than half the roughly 52x multiple at the dot-com bubble peak.
- Q1 2026 EPS growth for tech expected at 44%, accounting for 87% of S&P 500 EPS growth.
- Return on equity remains high, with earnings revisions more positive than any other sector.
- Goldman does not consider this a bubble, citing an absence of the tech IPO wave seen in past manias.
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How the Iran war fits into the picture
Goldman’s note also made a counterintuitive case about geopolitics. The ongoing Iran conflict has weighed on tech as investors priced in an inflation and rate shock. But Oppenheimer argued the sector could ultimately benefit if the conflict morphs into a growth shock instead.
“Given the relative insensitivity of the cash flows in the technology sector to economic growth, and the benefit it would derive on any rally in bond yields, this sector might prove to be more defensive over the next few months,” he said. The note was published before a two-week ceasefire was reached, conditional on Iran reopening the Strait of Hormuz.
The bottom line from Goldman on tech
“These factors have opened up an opportunity in the technology sector where growth rates remain strong, but valuations are now low,” Oppenheimer said.
The bank stopped short of predicting a specific rebound timeline or magnitude. Its argument rests on the idea that a disconnect between underlying earnings strength and stock price performance has created a window that is unlikely to stay open indefinitely.
Whether that window closes with a tech recovery or a broader earnings deterioration is the question investors will be weighing in the months ahead.
Related: Goldman has very good news for beaten-down Microsoft investors
