Investment banking firm Goldman Sachs announced Tuesday that technology companies may now present compelling investment opportunities following an extended stretch of poor market performance that has driven stock prices down significantly.
According to the financial services company, the current year has witnessed technology stocks experiencing some of their most challenging relative performance compared to other market sectors in five decades. “(So far this year), we have seen one of the weakest periods of relative returns for technology over the past 50 years,” the brokerage stated in their research note.
Multiple developments have contributed to the technology sector’s struggles since the start of 2025, leading many investors to shift their money toward value-oriented investments instead. Key factors behind this trend include the introduction of DeepSeek, an artificial intelligence platform from China, along with enormous capital expenditures by major U.S. technology companies and AI-related changes disrupting the software business landscape.
Goldman Sachs analysts believe these challenging conditions have created favorable circumstances for investors looking to purchase technology stocks, noting that while company growth rates continue to be robust, their market valuations have dropped considerably.
The research shows that in American markets, the premium pricing previously commanded by major technology companies has decreased substantially and now sits at nearly identical levels to the broader technology sector. On a worldwide basis, information technology companies’ price-to-earnings ratios have fallen below those seen in consumer discretionary, consumer staples, and industrial sectors.
“The underperformance of the technology sector is also starting to generate attractive valuation opportunities for investors as its valuation, relative to expected consensus growth, has fallen below that of the global aggregate market,” Goldman analysts explained.
The ongoing conflict involving Iran has also enhanced the technology sector’s investment appeal, according to the firm’s assessment. “Given the relative insensitivity of cash flows in the technology sector to economic growth, and the benefit it would derive on any rally in bond yields, this sector might prove to be more defensive over the next few months,” Goldman researchers noted.
Despite the depressed stock valuations, technology companies have continued to deliver impressive financial results, the investment bank reported. Within the S&P 500 index, market analysts expect information technology earnings per share to increase by 44%, representing 87% of the entire index’s earnings growth for the first quarter.
“Earnings revisions have been more positive than for any sector too. This has led to a record gap between performance and underlying earnings growth,” Goldman Sachs concluded in their analysis.
