Tech-Sector Valuations Dip Below S&P 500 Levels for First Time Since 2017
Tech stocks are now cheaper than the S&P 500 for the first time in seven years as AI profit uncertainty and chip losses drive a major market valuation shift.
POLICY WIRE — New York — — The technology sector has undergone a significant valuation shift, now trading at a lower multiple than the broader S&P 500 for the first time since 2017. This reversal follows a period of sharp declines in semiconductor-related equities and growing investor concerns regarding the long-term profitability of artificial intelligence investments.
Data indicates the forward price-to-earnings ratio for the tech sector has fallen to 17x, slipping behind the S&P 500’s average of 18x. Keith Lerner, chief investment officer at Truist Wealth, noted in a Thursday report that the S&P 500 Information Technology index is currently commanding only a 4% premium over the market, its lowest relative standing in approximately seven years.
The shift was accelerated by extreme volatility in the chip industry, which shed nearly 30% of its value over a five-week window while standard S&P 500 stocks remained relatively stagnant. At its peak in October 2025, the sector was valued at a staggering 32 times earnings, a premium that has collapsed by more than 30 percentage points since the June 2024 highs.
Market pressure has intensified recently, with the tech sector dropping 7.94% and the Nasdaq 100 falling 6.31% during a broader sell session. This trend marks the first time that technology-heavy stocks have become cheaper than the general market index since the early months of 2019.
Reporting by Policy-Wire (PW)>
