Technology stocks may now be presenting an attractive entry point for investors after a prolonged period of weak performance, according to Goldman Sachs.
The investment bank said the tech sector, including major US companies, has underperformed significantly in recent months, making valuations look more appealing compared with broader market trends, News.Az reports, citing Reuters.
“Over the past year, we have seen one of the weakest periods of relative returns for technology over the past 50 years,” Goldman Sachs said.
The recent weakness has been driven by several factors, including concerns around artificial intelligence competition, large-scale capital spending by major US tech firms, and ongoing disruption in software markets. These pressures have contributed to a rotation by investors toward value-focused sectors.
Goldman Sachs noted that valuation gaps in key areas of the sector have narrowed, with the premium for large hyperscaler companies falling closer to the broader industry average. In some cases, price-to-earnings ratios in global tech are now lower than those seen in traditionally defensive sectors.
Despite the decline in valuations, earnings performance remains strong. The bank highlighted that technology continues to deliver robust profit growth, with the sector expected to account for the majority of S&P 500 earnings expansion in the first quarter.
“Earnings revisions have been more positive than for any sector,” Goldman said, pointing to a widening gap between strong underlying fundamentals and weaker stock performance.
The report suggests that, despite recent underperformance, technology could regain investor interest as a defensive growth play, particularly if macroeconomic conditions stabilize in the coming months.
