U.S. technology stocks are undergoing one of their sharpest relative resets in decades, and according to Goldman Sachs, that disconnect is now approaching levels last seen after the dot-com bust.
The key shift is not just price declines, but relative underperformance versus the broader market, even as earnings remain resilient. Goldman notes that tech’s relative returns have weakened to their lowest point in roughly 50 years, creating what it describes as a potential generational opportunity.
A Rare Valuation Compression
The reset is most visible in valuation metrics. The price-to-earnings-to-growth (PEG) ratio, which compares valuation to expected earnings growth, has fallen below the global market average, an unusual inversion for a sector that has historically traded at a premium.
At current levels, tech’s PEG is comparable to trough levels seen in 2003-2005, when post-bubble pessimism dominated investor sentiment.
Market Performance Snapshot
The data highlights the divergence: while long-term performance remains strong, recent underperformance is concentrated in tech-heavy indices, particularly the Nasdaq.
Big Tech: Still Leading, But Volatility Rising
While dispersion is increasing, the broader takeaway is that price action has become inconsistent with earnings momentum, particularly in AI-linked names.
The AI Paradox: Growth Driver and Disruptor
Artificial intelligence remains the dominant long-term narrative but it is also creating near-term uncertainty.
On one hand, hyperscalers continue to invest aggressively in AI infrastructure, supporting long-term growth expectations. On the other hand, AI is beginning to disrupt existing software business models, particularly in enterprise SaaS.
This tension is already visible in credit markets. Blue Owl Capital has seen its shares fall sharply as investors reassess the quality of software-linked lending and the durability of cash flows in an AI-driven environment.
The broader implication is clear: AI is not just a growth driver, it is accelerating creative destruction within the sector itself.
Relative Underperformance Masks Fundamental Strength
Nukoud’s view is that the current reset in U.S. technology is no longer just sentiment-driven but clearly visible in relative valuation metrics. As of early April 2026, the S&P 500 Information Technology sector trades at 20.03x forward P/E versus 19.31x for the broader index, a premium of just 0.72 turns, the narrowest since mid-2020 while its PEG ratio has fallen below the global market, signaling unusually low expectations for future growth.
This compression contrasts sharply with fundamentals: sector forward EPS stands at 63.86, up 13.2% QoQ and 19.5% YoY, outpacing the broader market, even as the Nasdaq (-5.3% YTD) and XLK (-5.7% YTD) lag the S&P 500 (-3.3%). The result is a rare disconnect where a sector delivering superior earnings growth and margins is being priced closer to the market average.
For GCC investors, typically overweight energy and financials this creates a structural underexposure to global growth, making vehicles such as the Albilad MSCI US Tech ETF a practical way to capture the dislocation. In our view, the widening gap between earnings momentum and price performance is unlikely to persist, and historically such divergences have tended to man-revert.
ETF Angle: How GCC Investors Are Accessing the Reset
For GCC investors, the current dislocation is increasingly accessible through locally listed ETFs.
The Albilad US Tech ETF offers direct exposure to U.S. technology equities through a Tadawul-listed structure, allowing investors to participate in the sector without cross-border trading complexity. As valuations reset, such vehicles provide a straightforward way to capture potential upside from a recovery in U.S. tech.
At the same time, Chimera Capital has been expanding its ETF platform to include more global and thematic exposures, reflecting growing regional demand for sector-specific and innovation-driven investments.
What is emerging is a shift in how GCC portfolios are constructed. Rather than relying primarily on domestic equities and oil-linked sectors, investors are increasingly using ETFs to access global growth themes, particularly in technology.
This is where the current opportunity becomes more relevant. A valuation reset in U.S. tech does not just affect Wall Street, it directly impacts regional asset allocation decisions, especially as ETF access improves.
Beyond AI: The Next Wave
While AI dominates current narratives, attention is already turning toward adjacent technologies such as quantum computing, advanced semiconductors, and next-generation infrastructure.
These areas are still early-stage but are expected to drive the next phase of technological disruption. For long-term investors, this reinforces the structural case for maintaining exposure to the sector despite short-term volatility.
Conclusion
The current setup in U.S. technology is unusual: strong earnings, compressed valuations, and sustained underperformance relative to global markets, a combination rarely seen historically.
Goldman’s core argument is that this gap between fundamentals and price may not persist.
For GCC investors, improved access through vehicles like the Albilad US Tech ETF and offerings from Chimera Capital makes the opportunity more actionable. The key question is no longer access, but whether this reset marks the next entry point for the sector.
