The crash that was widely predicted just last summer hasn’t arrived yet. There was no single day when the AI stock market euphoria buckled, no Lehman moment, no front-page meltdown. Instead, over the better part of a year, Wall Street did something far more methodical—and far more telling: It slowly, deliberately, and almost silently wound down its euphoric investments in AI.
Part of what cracked it was fear of disruption from within. The release of successive generations of large language models—including DeepSeek—raised uncomfortable questions about competitive moats. For the first time in a generation, investors started to seriously question the terminal values of long-duration growth companies. Fears of AI disruption led to a sharp de-rating of software stocks specifically, which fell from a premium market multiple to parity in a matter of months. Investors began hunting for the AI era’s version of Kodak: a dominant company hollowed out by the very wave it helped create.
Oppenheimer framed this as the “technology value opportunity,” calling it a once-in-a-lifetime chance to acquire stocks that have been expensive for decades. This has been one of the weakest periods of relative returns for technology over the past 50 years and a stark contrast from most of the post–Great Financial Crisis era, he noted. The air coming out of the AI trade balloon, in other words, is a rare opportunity for investors to buy the dip. Or perhaps, the fear of a bubble is a healthy thing to have in volatile times like these.
What makes this deflation remarkable is what didn’t happen alongside it. There was no wave of frenzied equity issuance of the kind that preceded the dotcom implosion, when roughly 500 U.S. companies went public in a single year. IPO activity has been a fraction of that. Debt ratios for the tech sector have risen modestly but remain historically low. Earnings, crucially, never collapsed: Analysts project info tech to grow earnings per share by 44% in Q1 2026, accounting for 87% of S&P 500 index earnings growth. Goldman estimated that AI infrastructure investment will account for roughly 40% of all S&P 500 earnings growth this year. Wilson’s data corroborated this as S&P 500 forward 12-month EPS growth is accelerating to multiyear highs.
Goldman’s strategists agree, pointing out that the technology sector’s PEG (price/earnings-to-growth) ratio has now fallen below that of the global aggregate market—a level last seen at the trough following the dotcom bust in 2003–05.
The bubble didn’t pop. Wall Street looked at it, blinked, and slowly exhaled—leaving behind not a crater but a clearing, and for those paying attention, perhaps the most attractive technology entry point in more than a decade.
