Anxiety.
It’s the only word popular tech stocks now face.
“Technology anxiety comes from the atmosphere in software,” said Julian Emanuel, strategist at Evercore ISI.
“Existential concerns and dynamics in other parts of the world [tech] sector with a more visible path to AI monetization – spilling over into AI/Hyperscalers. Price action sets the (now cautious) narrative. AI itself faces questions about its adoption, leverage, circular financing and overspending,” he added.
Long-biased technology-focused investors are as defensive as they have been at any time since ChatGPT kicked off the “AI Revolution” bull market in Q4 2022, Emanuel wrote.
Information technology trades at its lowest valuation premium to the S&P 500 (^GSPC) in the post-pandemic environment, according to data from Evercore ISI. The Magnificent Seven’s price-to-earnings multiple is in line with its post-pandemic average, while the other 493 S&P 500 stocks are trading near their all-time high valuations.
Meanwhile, the price-to-earnings growth ratio (PEG ratio) of mega-cap tech has declined to just 1.4 times, matching the low reached in 2022, Goldman Sachs strategists noted.
Learn more: Are we in an AI bubble? How to protect your portfolio if your AI investments backfire.
Ben Snider, a strategist at Goldman, explained: “Investors are increasingly questioning whether earnings-based valuations are appropriate for stocks involved in the development of AI investments, as large capital expenditures have weighed on free cash flow. Although price-to-earnings ratios are low, price-to-free cash flow multiples are very high relative to history, indicating the risk of falling valuations if concerns about AI investment returns continue to grow.
Salesforce Software Stocks (RCMP) and working day (DAY) are off to a terrible start in 2026, down 14% and 12% respectively.
There are, however, some strengths in the technology. One is the alphabet (GOOGLE).
Shares of the search giant have already risen 5% this year and the company’s market capitalization stands above $4 trillion. He is the highest performing member of the Magnificent Seven in 2026.
For comparison, the actions of AI chip darling Nvidia (NVDA) are up slightly over the year.
“I think Google could end the year with the highest market capitalization [in the market]” said Tom Sosnoff, veteran trader and founder of Thinkorswim, on Yahoo Finance Opening Offer. Nvidia currently holds this distinction with a market capitalization of $4.57 trillion.
But Google makes a strong case that it will be the AI-centric stock to beat in 2026.
