Observed Signal · Apr 17, 2026 · Market Analysis · Source: a16z · Impact: 3/5 · Sentiment: Positive
Are Tech Stocks Cheap?
This a16z analysis reviews market data and charts arguing that technology and software stocks may be cheaper than they appear: although tech earnings still trade at a roughly 25% premium versus the broader market, that premium has collapsed from prior levels even as tech earnings forecasts and upward revisions for 2026 have climbed fastest among sectors. The piece cites Goldman Sachs Research, BlackRock and insider-buying data (State Street Tech ETF / XLK). It also describes an AI experiment showing LLMs are more pro-activist in proxy fights than traditional advisors and highlights institutional shifts — e.g., JPMorgan Asset Management’s in‑house Proxy IQ — that could alter proxy voting dynamics. Additional sections summarize increasing quantifiable AI benefits in enterprise surveys, long-term declines in global oil intensity, and a local NYC grocery project costing $30M.
Highlights a dislocation between rising tech earnings and falling valuation premiums, growing AI influence on corporate governance and proxy voting, and increasing measurable AI ROI — all factors that can affect investment flows, corporate strategy, and technology adoption across industries.
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Key Takeaways & Evidence Grounding
- Goldman Sachs Research: as of April 8, tech and software earnings trade at ~25% premium to the rest of the market, a fraction of last year's premium and similar to ~2018 levels.
- So far in 2026, tech companies have had larger upward earnings revisions than any other sector globally, with composite EPS growth expectations for Info Tech around 40% for 2026.
- BlackRock data: US IT sector growth expectation rose from 31% at the start of the year to 43.4% as of April 9, versus 18.7% for the broader US market.
- Analysis claims insider buying for companies tracked by the State Street Tech ETF ($XLK) reached its highest level in 15 years.
- Kekst CNC AI experiment: four frontier AI models favored activist shareholders in ~45% of ~50 proxy fights, compared with ISS (36%) and Glass Lewis (42%); actual shareholder votes favored activists only ~14%.
Connected Companies & Entities
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Related Market Signals & Shifts
Recent verified developments and strategic activity across this market segment.
Tech stocks offer best value after strong earnings
U.S. technology stocks have become more attractively priced following a strong earnings season, with Morningstar finding the AI investment theme trading at its largest discount since 2019. Analysts say robust earnings have helped tech firms "grow into" prior lofty valuations by expanding earnings, while earlier forward P/E ratios for the S&P 500 Information Technology sector peaked above 30x in October 2025 (FactSet). Capital expenditure among the largest tech companies — the so‑called "Magnificent Seven" — is tracking near $725 billion for 2026, above prior expectations, according to Saxo Bank. Some investors remain cautious about whether hyperscalers can sustain elevated capex and supranormal returns indefinitely, and BNP Paribas Asset Management flagged potential operational constraints in AI adoption tied to available model processing tokens. The article was published May 8, 2026 by CNBC reporter Joseph Wilkins.
Cheaper Chinese LLMs Trigger Tech Sell-Off
Tech stocks slid after a New York Times report that OpenAI may delay its IPO, while analysts flagged the launch of GLM5.2 by Hong Kong‑listed Z.ai (formerly Zhipu AI) as a major new competitive threat. Jefferies said GLM5.2 is “almost equal” to Anthropic’s model at a fraction of the cost, and Morgan Stanley traders praised its coding capabilities. Deutsche Bank noted China’s DeepSeek V4‑Pro can perform many everyday tasks at a tiny fraction of frontier model costs. Investors fear cheaper, high‑quality international models and possible IPO hesitancy could reduce forecasts for AI infrastructure spending; chip and infrastructure stocks such as Micron, AMD and Intel fell on the rout. Analysts warn enterprises may shift workloads on‑premises or to lower‑cost models, altering demand for cloud and hardware investments.
Markets Grade Big Tech Earnings Differently Over AI Spend
CNBC Investing Club hosts Paulina Likos and Zev Fima analyze recent Big Tech quarterly results and explain why investors are reacting differently across companies. Alphabet, Microsoft, Meta Platforms and Amazon posted strong headline numbers, but underlying differences matter: hyperscalers are increasing capital expenditures driven by AI infrastructure demand even as memory and other hardware costs rise. Investors are more tolerant of elevated AI spending for companies that can already convert those investments into revenue and profit growth, while firms still proving monetization face greater scrutiny. The discussion highlights potential opportunity areas—cloud, advertising, and operational AI deployment—and argues that a company’s ability to monetize AI and deploy it internally could determine market leadership in the next phase of the AI trade.
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