Depressed tech valuations could offer entry point for investors, Goldman Sachs says

By Reuters | Updated: April 7, 2026

April 7 (Reuters) – Technology stocks, including those from the United States, are looking cheap following a prolonged period of underperformance, creating a potential entry point for investors, Goldman ​Sachs said on Tuesday.

“(So far this year), we have seen one ‌of the weakest periods of relative returns for technology over the past 50 years,” the brokerage said in a note.

• Since 2025, several factors have contributed to the relative weakness of the ​broader technology sector, prompting investors to rotate into value-driven stocks.
• The factors include ​the release of Chinese artificial intelligence (AI) model DeepSeek, massive capex spending ⁠by U.S. hyperscalers and AI-driven disruption in the software industry.
• These factors have opened ​up an opportunity for investors to enter the sector, where growth rates remain strong ​but valuations are low.
• In the United States, the valuation premium for hyperscalers has fallen and is now almost same as for the rest of the sector.
• Globally, the IT sector’s price-to-earnings ratio is ​below that of discretionary, staples and industrials.
• “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,” Goldman said.
• Another factor that has increased the attractiveness of the technology sector is the effect of the war in Iran.
• “Given the relative insensitivity of 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,” Goldman ​said.
• Despite depressed valuations, technology earnings have been strong, Goldman said.
• Among ​S&P 500 (.SPX) sectors, Goldman said the market consensus is for IT earnings per share to grow by 44%, accounting for 87% of index EPS growth in the first quarter.
• “Earnings revisions ⁠have been ​more positive than for any sector too. This ​has led to a record gap between performance and underlying earnings growth,” Goldman said.

Reporting by Akriti Shah and Siddarth S in Bengaluru; Editing by Subhranshu Sahu

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