Goldman Sachs flags tech earnings bubble

Goldman Sachs Global Investment Research published its Global Strategy Views report on August 16, 2026, stating that while technology stocks do not appear to be in a valuation bubble, there may be an 'earnings bubble' as investors question whether the sector's strong earnings growth can be sustained. The report notes that technology valuations have moderated on a price-to-earnings basis, but implied future growth has been rising, though still well below dot-com era peaks. The introduction of ChatGPT triggered an 'explosion in capex' among hyperscalers, eroding their premium cash flows and pushing them toward debt and equity markets for funding. This has led to a de-rating of dominant technology companies, with the five biggest US stocks' P/E premium over the rest of the S&P 500 nearly vanishing. Unlike the dot-com era, prices have adjusted modestly while earnings remain exceptionally strong. Within technology, software stocks have seen a sharp valuation reset, with their global P/E premium falling to around 20% from nearly 200% at the start of the century. Leadership has shifted from software to hardware, with memory and chip companies benefiting from explosive demand for computing capacity, though cyclical concerns have also led these stocks to de-rate.