High Growth, Lower Valuations: Why Goldman Sachs Now Sees 'Opportunity' in Tech Stocks

Are tech stocks the new value stocks?

That's what Goldman Sachs analysts explored in a recently published report that examined the sector's relative performance since the start of the year. U.S. technology stocks—particularly the cohort called the Magnificent Seven, referring to Nvidia (NVDA), Microsoft (MSFT), Meta Platforms (META), Alphabet (GOOGL), Amazon (AMZN), Apple (AAPL) and Tesla (TSLA)— have powered broad market indexes higher in the aftermath of the 2008 financial crisis, but have started to lag the rest of the world's stocks.

The iShares MSCI ACWI ex US ETF (ACWX), an exchange-traded fund that holds a range of international and emerging market stocks, has risen 3% year-to-date through Monday. The Roundhill Magnificent Seven ETF (MAGS), which holds the tech majors in equal proportion, has fallen 11% over the same period. That, Goldman suggest, could be a buy signal.

Investors have panned the technology sector in search for growth elsewhere in the U.S. stock market. Now Wall Street firms are suggesting that the "opportunity" for future performance and growth lies in that very cohort.

The U.S. equity market at large "no longer looks so expensive" relative to the rest of the world, they wrote, and U.S. tech stocks now look like "valuation opportunities" because of the growing gap between their price performance and their expected earnings growth.

Put another way, the U.S. tech sector has posted the worst performance relative to the rest of the world's stocks excluding tech, since the early 1970s, when U.S. inflation was in the double digits.

A host of factors have weighed on the sector starting with the release of DeepSeek in early 2025, when China's answer to the U.S.'s artificial intelligence started to worry investors about the U.S.'s ability to compete. Hyperscalers' outsize capex spending on AI has raised concerns about that cohort's ability to produce returns on their investments.

"These factors have opened up an opportunity in the technology sector where growth rates remain strong, but valuations are now low," Goldman analysts including Peter Oppenheimer said in a report published Tuesday. They added that there is now a "record gap" between U.S. tech stocks' earnings per share growth and their performance.

Consensus forecasts suggest tech stocks earnings-per-share growth hit 44% for the first quarter of this year, accounting for almost 90% of the S&P 500's overall growth for that period. Meanwhile, Goldman said, the tech sector's debt levels remain low when compared to the rest of the U.S. market.

The war in Iran would also appear to raise the attractiveness of the sector at large, because the impact on macro markets has been to price in higher inflation and interest rates rather than lower growth prospects, Goldman said. The longer the Strait of Hormuz remains effectively closed, the higher the risk of a perceived growth shock.

"Given the relative insensitivity of the 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's analysts said.That said, investors tend to be under-allocated to stocks outside of the Magnificent 7, according to Michael Landsberg, chief investment officer of Landsberg Bennett Private Wealth Management. To Landsberg, the tech majors' relative underperformance since the group's peak on Halloween is a sign to look beyond them."We know everyone has Mag 7 names," he said in a Tuesday morning interview with CNBC. "The 493 is where you wanna look."