US Tech Stocks Cheap Again After Stellar Earnings
The AI bubble narrative is losing steam. After another exceptional earnings season, US tech stocks offer their best value in years. Analysts say the question now is not whether to buy, but how long the runway lasts.
A research pointed to the US equity market volatility of early 2026 as leading to a decline from record-high valuations among AI stocks, resulting in “more attractive pricing” for those most impacted.
The peak was significant. That peaked in October 2025, when the forward P/E ratio for the S&P 500 Information Technology sector reached over 30x, according to FactSet.
However, those valuations have since corrected. Capital expenditure for 2026 was lifted among the “magnificent seven” in bumper April earnings updates. Their combined spend now tracks around $725 billion, versus previous expectations of roughly $670 billion, according to Saxo Bank.
What the Earnings Season Reveals About US Tech Stocks
The results speak clearly. Of the more than 80 companies in the S&P 500 that have so far posted their latest quarterly financials, nearly 85% have topped earnings expectations, according to FactSet data.
As a result, analysts are turning constructive. “Taken together with superior margins and greater resilience to energy-driven demand shocks, this valuation backdrop reinforces our view that the US remains better positioned than its global peers,” wrote Krishna at Barclays. Krishna sees the S&P 500 ending the year at 7,650, implying upside of 8.3%.
Meanwhile, JP Morgan is equally direct. “When investors are excited about AI, they have bought tech,” wrote global investment strategist Kriti Gupta. Tech is increasingly becoming “the answer to everything and everyone,” both a cyclical and defensive trade.
Not everyone is celebrating. Dan Kemp, founder of investment consultancy Portfolio Thinking, said investors will require a “strong belief” to assume companies can continue generating supranormal returns without being competed away.
Supply constraints are emerging. BNP Paribas Asset Management’s Sophie Huynh noted that physical constraints could pose a bigger problem to profits than the market cycle itself. “The pace of adoption could be unequal, as constraints could come from the total amount of tokens at disposal,” she said.
US tech stocks being cheap in 2026 is a genuine opportunity. However, the question investors face is not whether the earnings are real. It is whether this level of capex is sustainable without a return horizon that justifies it.
