MW A generational buying opportunity has opened up for U.S. tech stocks, says Goldman Sachs
By Barbara Kollmeyer
Goldman sees weakest relative returns for U.S. tech in 50 years
Goldman sees a rare buying opportunity for beaten-down U.S. tech stocks right now.
Tech stocks are suffering their worst stretch of performance against the broader market in a half century.
As stock-market gains increasingly bolster countries, sectors and factors beyond tech, the result is that investors are now faced with the best opportunity in decades to buy the beaten-down sector, says our call of the day from a team led by Goldman Sachs' chief global equity strategist Peter Oppenheimer.
"The U.S. equity market no longer looks so expensive on a relative basis. Its earnings have remained strong while it has suffered a correction," said Goldman.
For example, they say there's been a reset of the price-to-earnings-to-growth ratio $(PEG)$ - comparing a stock's price against how quickly analysts expect the company's earnings to grow over the coming years - between the U.S. and the rest of the world. That follows years of decoupling due to a U.S. exceptionalism narrative.
The PEG ratio for tech is now below that of the global aggregate market, another green flag for budding "valuation opportunities." The level of pessimism has reached a point where tech's trailing PEG is implying "future earnings will be much weaker and is as low as the trough after the tech bubble burst in 2003-05."
Concerns over hyperscaler capex spending and AI disruption that has hit software and some other tech stocks are among factors that have led to investors re-rating long neglected "old economy" companies, such as energy, basic resources, chemicals, healthcare and industrials.
While the strategists say those sectors are deserving of higher values, tech is being overly punished despite strong growth rates. The valuation for hyperscalers, for example, is now close to the same as the rest of the S&P 500.
"Globally, the IT sector now has a P/E below consumer discretionary, consumer staples and industrials. Unlike most sectors, its valuation premium relative to history has also fallen sharply," they said.
Even amid worries about rising capital expenditure and lower prospective returns, the return on equity for these stocks remains high, with earnings revisions more positive than for any other sector. The result is a record gap between performance and underlying earnings growth for tech.
"While a severe shock to credit availability or hyperscaler revenues could jeopardize this spending, analyst estimates for the magnitude of the earnings tailwind created by those investments have only increased during the past few weeks," said Goldman.
They also reiterate their lack of bubble concerns, noting that valuations are still lower than what was seen before the 2000 tech bubble and th1970s Nifty Fifty bust. Unlike past bubble setups, the market hasn't been flooded with tech IPOs, with those to come likely to offer justification for differentiating within the sector.
The Iran war is offering yet one final reason to buy tech, because the longer disruption to the Strait of Hormuz continues, the more likely for chances of a "perceived growth shock" that will limit interest rate rises.
"Given the relative insensitivity of the cash flows in the technology sector to economic growth, and the benefit it would derive on any rally inbond yields, this sector might prove to be more defensive over the next few months," said Oppenheimer and his team.
The markets
U.S. stock futures (ES00) (YM00) (NQ00) have been moving between gains and losses all morning, as have oil prices (CL.1) (BRN00), as investors watch developments in the Middle East.
Key asset performance Last 5d 1m YTD 1y S&P 500 6592.15 3.51% -2.19% -3.70% 29.92% Nasdaq Composite 21,923.99 4.66% -2.07% -5.67% 40.65% 10-year Treasury 4.338 -1.80 23.80 16.60 16.10 Gold 4710.3 4.91% -9.09% 8.73% 54.13% Oil 111.39 10.09% 22.04% 94.03% 78.74% Data: MarketWatch. Treasury yields change expressed in basis points
The buzz
President Donald Trump's 8 p.m. Eastern deadline looms for Iran to open the Strait of Hormuz or face devastating strikes against its power plants and bridges.
Iran has demanded a permanent end to attacks. Its ambassador to Pakistan also reportedly said efforts by the mediator country were reaching a "critical sensitive stage." Iranian media reported explosions on Kharg Island, the key island for oil exports.
Durable-goods orders are coming at 8:30 a.m., the Federal Reserve Bank of New York's survey of one-year inflation expectations is scheduled for 11 a.m. and consumer credit is due at 3 p.m.
New York Fed President John Williams will speak on Bloomberg at 8:30 a.m., followed by Chicago Fed President Austan Goolsbee at 12:35 p.m. and Fed Vice Chair Philip Jefferson at 5:50 p.m.
A $58 billion auction of three-year Treasury notes is ahead.
Health insurers rallied on an improved Medicare Advantage reimbursement rate.
Bill Ackman's Pershing Square has offered to buy Universal Music Group (NL:UMG) in a deal worth around $63.5 billion.
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The chart
Shares of troubled private-credit investment group Blue Owl Capital (OWL) closed down 1.4% on Monday, dipping below a late 2022 low, as the chart shows. Down 43% this year, Blue Owl has become the poster child for the industry's troubles as investors pile up redemption requests for the firm's private-credit funds amid wariness over the quality of the loans it's made to software companies as well as the potential for artificial intelligence disruption. Last week, one of Blue Owl's private-credit funds said it capped redemptions at just 23% of what was requested.
Top tickers
These were the top-searched tickers on MarketWatch as of 5 a.m.:
Ticker Security name TSLA Tesla NVDA Nvidia GME GameStop MU Micron AMC AMC Entertainment AMD Advanced Micro Devices NIO NIO AMZN Amazon AAPL Apple AVGO Broadcom
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-Barbara Kollmeyer
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(END) Dow Jones Newswires
April 07, 2026 06:56 ET (10:56 GMT)
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