Remember when everyone was freaking out about AI taking over the world? Well, tech stocks got absolutely hammered in Q1 2026, and now the valuations are basically back where they were *before* ChatGPT blew everyone’s minds in late 2022. Translation: the market’s having a clearance event, and the smart money is starting to notice.
Here’s the wild part: tech valuations have compressed from 40x to 20x earnings. That’s not a correction—that’s a reset button. According to Adam Kobeissi, founder of the Kobeissi Letter, we’re looking at a “historically opportune moment” to jump back in. And he’s not alone. Wall Street’s suddenly waking up to the fact that while the sector got pummeled by the Iran War and general market chaos, the actual earnings haven’t disappeared. They’re just cheaper now.
Oracle kicked things off this week with a 12% surge, signaling that maybe—just maybe—the tech bloodbath is over. Daniel Newman, CEO of Futurum, is calling this a “reset before the next leg up.” Translation: the pain is priced in, and the upside isn’t.
The real kicker? Tech earnings season is about to kick off, and analysts expect the sector to lead. Ryan Detrick from Carson Group put it bluntly: “Technology is expected to lead this upcoming earnings season. We don’t think that’s going to miss.” When companies report numbers that justify these lower valuations, that’s when the real rally could start.
Now, not all tech is created equal. The winners will be companies that aren’t getting disrupted by AI—they’re *using* it. Think the Magnificent Seven: Alphabet, Meta, Amazon, Microsoft, and Nvidia. These aren’t just surviving the AI boom; they’re driving it. Goldman Sachs is particularly bullish on “secular growth” stocks—companies whose profits aren’t tied to the broader economy’s ups and downs. Nvidia, Meta, Broadcom, and Micron Technology are on their radar.
If you’re into cybersecurity (and honestly, who isn’t these days?), Wedbush’s Dan Ives is eyeing CrowdStrike, Palo Alto, Zscaler, Checkpoint, and Rubrik as “on sale” picks. He’s also bullish on Microsoft, Salesforce, ServiceNow, and Palantir.
The bottom line: tech stocks got crushed, valuations are back to pre-AI-boom levels, and earnings are about to prove that the sector’s fundamentals never actually broke. That’s the setup for a rally. Whether it actually happens depends on whether the Iran situation stabilizes and whether earnings actually deliver. But right now? The risk-reward looks pretty compelling for anyone who can stomach the volatility.
