The gap between big tech and the rest of the market just vanished. Here’s what it means for investors.

Goldman Sachs argues that the recent selloff in high-flying AI and mega-cap tech stocks has erased the long-standing valuation premium of the largest U.S. companies, creating a potential opportunity for investors. The firm says the top five U.S. stocks now trade at only a slight P/E premium to the rest of the market, while sector rotation has lifted the valuations of lagging “old economy” groups such as industrials. Goldman notes that earnings remain strong even as valuations reset, and says the U.S. market still looks attractive on return-on-equity grounds. The bank also expects rotational volatility to ease after the recent deleveraging by hedge funds and ETF investors. Broader market tone is constructive, with U.S. futures higher and tech valuations no longer as stretched, suggesting a more diversified equity approach may outperform concentrated momentum exposure.