Tech valuations fall to ChatGPT-launch levels as earnings growth stays strongest

Yahoo Finance··US·Read original
3▲0 ▼0Impact / 5
Summary · why it matters

The S&P 500's tech sector forward price-to-earnings ratio has dropped from 32 times last October to approximately 21 times, putting valuations roughly where they stood when OpenAI launched ChatGPT in November 2022, according to Truist chief investment officer Keith Lerner. Forward earnings growth for tech remains by far the strongest in the market, with estimates rising approximately 20% over just the past three months. Lerner said tech's relative valuation premium is down to approximately 9%, near the lowest level of the past decade, and described the sector as a relative opportunity for investors. The compression comes as stubborn inflation and elevated Treasury yields, with the 10-year yield hovering near 5%, raise discount rates and erode the present value of future earnings, while investors demand proof of return on investment as hyperscalers such as Meta and Amazon pour an estimated $800 billion into AI capital expenditures this year. Lerner said underweight investors should consider adding equity exposure, adding that a deeper pullback would potentially provide an opportunity to become more aggressive.

Impact on assets 2

Artificial Intelligence▲ · 1 stocks
Amazon.com Inc
AMZN
± MixedCapitalrelevance

Named as a hyperscaler pouring AI capex into the estimated $800B spend, which pressures valuations via discount rates but is not a company-specific development.

Spatial Computing / AR/VR▲ · 1 stocks
Meta Platforms Inc.
META
± MixedCapitalrelevance

Named as a hyperscaler pouring AI capex into the estimated $800B spend, which pressures valuations via discount rates but is not a company-specific development.

Off-coverage companies 1

OpenAIPrivate± Mixed
relevance

© 2026 MarketIVNews