Wall Street’s one month-long tech sell-off may have now produced an unusual valuation signal taht US tech stocks are now trading at a lower forward price-to-earnings ratio than the broader market for the first time in nine years. This also comes amid the questioning around the sustainability of the AI boom, and the sharp correction has made the sector look relatively cheaper.
The S&P 500 technology sector’s forward P/E ratio fell to 17.1x as of Thursday’s close, according to LSEG Datastream data cited by Reuters. This compares with 17.9x for the broader S&P 500. The multiple, which measures share prices against estimated earnings over the next 12 months, had climbed above 32 in Oct 2025. This follows a month-long decline in AI and tech shares, which resulted in the sector’s biggest one-day fall in more than six years last week. Investors were reportedly concerned that Democratic victories in the US midterm elections could slow data centre construction and spending, which have long supported the technology rally.
Keith Lerner, chief investment officer at Truist Advisory Services, told Reuters that the fall in valuations suggests the market may already be pricing in a substantial amount of negative news. He added that even a limited improvement in sentiment could have a meaningful impact on stocks.
Also Read | Layoffs Are Rising In Tech, But These Skills Are Helping People Unlock Better Pay
Technology, however, remains the largest sector in the S&P 500, accounting for more than 35% of the index’s market cap as of Thursday’s close, and its weight remains higher than during the peak of the dot-com bubble in 2000.
The IT sector has also been a major driver of the ongoing bull market, and since the inception of the winning streak in October 2022, technology stocks have gained more than 200%, nearly twice the S&P 500’s advance. Even after the recent sell-off, the sector was up around 11% in 2026. Some AI-linked stocks have retained much larger gains, with SanDisk still up around 250% in 2026, Dell Technologies gaining about 160%, and Micron Technology up around 140% this year.
However, the US tech sector’s valuation does not capture the entire AI trade. Alphabet, Amazon and Meta, three of the biggest companies spending on data centres, are classified in other S&P 500 sectors. This means concerns about AI infra investment extend beyond the technology sector’s P/E.
CoreWeave’s results on Tuesday, followed by Nvidia’s earnings on November 17 and Dell’s on November 24 are now next on the investors’ radar. Developments around AI company Anthropic’s potential IPO and the upcoming US inflation report could also influence sentiment.
Essential Business Intelligence,
Sharp Market Insights,
Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.
