Tech stocks haven't been this cheap since OpenAI launched ChatGPT

Technology stock valuations have compressed significantly, reaching their lowest levels since OpenAI launched ChatGPT in November 2022, according to analysis by Keith Lerner, Chief Investment Officer at Truist. The S&P 500 technology sector's forward price-to-earnings ratio has dropped from 32 times last October to approximately 21 times. This multiple contraction brings tech's relative valuation premium down to about 9%, near its lowest level in the past decade. Despite the valuation multiple reset, fundamental growth metrics remain robust across the technology landscape. Forward earnings growth estimates for the sector have increased by roughly 20% over the last three months, outpacing the broader market. Valuation pressure has been driven primarily by stubborn inflation, elevated 10-year Treasury yields hovering near 5%, and investor scrutiny over massive capital expenditure commitments, with major hyperscalers pouring an estimated $800 billion into artificial intelligence infrastructure. Lerner notes that the valuation discount reflects prevailing market risks around AI monetization timelines and enterprise IT spending. He views the compression as creating an attractive entry point, suggesting underweight investors consider increasing equity exposure to technology at current levels.