US Tech Stocks Have Gone From 47% More Expensive Than the S&P 500 to Just a 4% Premium in Less Than 6 Months. The Lowest Since 2019 and on Track to Be Cheaper Than the Broader Market for the First Time Since 2017
u/-----Marcel----- ·
Reddit — r/StockMarket
· March 29, 2026 at 22:39
· ⬆ 323 pts
· 💬 56 comments
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AI Summary
Summary
The post highlights that the valuation premium of US tech stocks (S&P 500 Information Technology index) over the broader S&P 500 has collapsed from ~47% in June 2024 to just 4%, nearing its lowest level since 2019.
The author's thesis is that this extreme compression represents a rare buying opportunity, especially if/when tech stocks become cheaper than the S&P 500 for the first time since 2017.
Quality assessment: Well-researched DD. The post cites specific, verifiable index valuation data (forward P/E) and provides clear historical context and a defined trigger for action.
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US technology stocks have rarely ever been this cheap:
The S&P 500 Information Technology index is now trading at just a 4% forward P/E premium to the S&P 500, the lowest since January 2019.
This percentage has fallen -32 points since October 2025, one of the largest discounts on record.
In other words, tech stocks are the cheapest relative to the broader market in 7 years.
By comparison, the technology sector was \~47% more expensive than the S&P 500 at the June 2024 peak.
Tech stocks are now on track to become cheaper than the S&P 500 for the 1st time since 2017.
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Today's observation: US tech stocks (red) are now:
a) Priced lower than they were during Liberation Day last year
b) The premium vs. the broader market has almost completely disappeared (yellow)
→ If/when the yellow line crosses 0: a rare buying opportunity
The S&P 500 Info Tech sector's forward P/E premium over the S&P 500 has collapsed from 47% to 4% in under 6 months, a historically large and rapid discount. Such extreme relative undervaluation, nearing a crossover where tech becomes cheaper than the market, has historically signaled a strong contrarian buying point (last seen in 2017). A bet on the mean reversion of tech sector valuations relative to the broader market. The valuation compression could persist or worsen if tech earnings falter or if a broader market downturn drags all sectors lower, negating the relative value argument.
This Reddit post, published March 29, 2026,
features u/-----Marcel-----
discussing XLK.
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