Big Tech P/E Premium Shrinks to Near S&P 500 Levels as AI Spending and Yields Bite
Updated
Updated · Yahoo Finance · Aug 3
Big Tech P/E Premium Shrinks to Near S&P 500 Levels as AI Spending and Yields Bite
3 articles · Updated · Yahoo Finance · Aug 3
Summary
Goldman Sachs said the five largest U.S. stocks now trade at P/E ratios only marginally above the other 495 S&P 500 companies, ending a premium that had persisted since 2017.
Investor anxiety has grown as Oracle, Meta and Alphabet keep committing hundreds of billions of dollars to AI infrastructure, raising doubts that revenue will justify the spending and the debt used to help fund it.
Tech sentiment has weakened further as higher Treasury yields and expectations of prolonged elevated rates curb appetite for richly valued growth shares, pushing investors toward defensive and cyclical sectors.
Within tech, leadership has shifted from software to hardware: software's global P/E premium has fallen to about 20% from nearly 200% at the start of the century, while memory and chip names had led on compute demand before recent selling pressure.