Tech valuations settle down, offering new opportunity for investors

00:00 Speaker A

you’ve just heard this Peter Oppenheimer note over at Goldman Sachs. To me, it makes a lot of sense. Are you a buyer of tech stocks finally after the sell-off, the selling pressure they have been under for the better part of this year?

00:13 Art

Yeah, not just this year, but the fourth quarter of last year we saw, you know, all sorts of concerns over AI disruption, taking all software socks down, the circular circular nature of some of the capex spend a concern and then, you know, when do we get the return on invested capital. But I think the the valuations we’re seeing in tech stocks right now writ large, just looking at the the the that sector ETF and the S&P 500, hasn’t been this low since 2023 and sits in a place that’s lower than the multiple for the S&P 500 index itself. So that is throwing off a signal that it’s time where you know, we’ve luckily bottommed out. And I think we’ve seen flashes of this in a couple of up days that we’ve seen over the past five weeks. Technology’s outperformed everything else. And I think that’s that’s a view to what’s to come. If we find an off ramp to this war, I think tech can explode here and coming from a very, very low base.

01:05 Speaker A

Art, you’ve been doing this for a hot minute. Could you just please remind folks viewers out there that there are other tech stocks besides the Mag 7.

01:16 Art

Yeah, well, you know, you can buy the tech sector ETF or you can start looking at what’s very oversold, extremely oversold and that’s all software companies with the with the assumption that AI is going to somehow disrupt them all. So to me, I think software is probably cheaper than hardware. I certainly think looking at things beyond to your point, the Mag 7, digging down deeper at some of the other artificial intelligence winners here, and I think you can find a multitude of bargains out there right now and I certainly, you know, wouldn’t sleep on most of the Mag 7 right now. I’d take Tesla out of that, but I think the Mag 7 trading at multiples we haven’t seen forever. And Nvidia’s trading at a multiple that’s cheaper than the S&P growing its earnings north of 60% and throwing off 72% gross margins. So I don’t think you have to throw that baby out with the bath water, but I certainly think there’s a lot of valuation attractiveness to the tech sector right now.

02:10 Speaker A

Feeling your vibe here, Art. Brooke, over to you. Why is it so noisy down there at the Nasdaq? I’m I’m guessing they’re cheering because you’re there, Brooke.

02:18 Brooke

I mean, they were pumping up music, they were cheering. It’s Greenland Energy ringing the bell today. I know we’re here from them later on this quarter, but or later on today during today’s trading session. But certainly, I mean, what we’re hearing all throughout the Nasdaq, throughout the industry and from so many strategists on the feet on the street is that this is certainly in a time in which the Mag 7 has certainly declined, especially when it comes to the retail trading activity. We heard from City strategist, Stewart Kaiser earlier this week that over the past five days, we’ve seen retail trading activity for the Mag 7 hit the lowest level since 2022. And also, Brian, I know that you’ve been taking a look at a Barkley’s note. What we’ve heard within that note is that there are certain stocks within that Mag 7 that are part of the top 10 detractors from the S&P 500 during the first quarter. The first quarter had one of its worst performances in history. And if you take a look over the past few days, we’ve certainly seen that be a result. Nvidia, Microsoft, Google, Apple, Tesla, Amazon, meta had some of their worst performances during the first quarter that we’ve seen in quite a while. And heading into this year as our was mentioning, there was such high hopes, especially being here at the Nasdaq. I feel like every single day, I was touting about these tech socks doing so well into the end of 2025 and really now those high hopes that roughly 680 billion on AI related capex spending is being put to the test, especially in this first quarter against this macro backdrop.