Tech valuations are back to pre-AI boom levels

Article Summary

Apollo’s analysis shows that tech sector valuations have compressed sharply from ~40x to ~20x forward P/E ratios, returning to levels last seen before the AI boom began. This represents a significant repricing of the sector after years of elevated multiples driven by AI enthusiasm.

Discussion

• Commenters question the methodology: the S&P 500 IT sector excludes Alphabet, Meta, and Amazon due to the 2018 GICS reshuffle, so “tech” here is narrower than most think
• One commenter pushes back with data — GOOG is still 2-3x its pre-AI boom price, suggesting the headline overstates the correction
• A bear case: big tech is now capital-intensive industrial businesses with constrained free cash flow, and P/E compression may reflect analysts catching up to reality
• Skepticism about the broader AI narrative: non-technical users increasingly dislike AI interactions, and hiring patterns are reverting toward 2022 norms
• Sharp one-liner captures the counterpoint: “Someone needs to tell OpenAI and SpaceX that” — private valuations remain detached from public repricing

Discuss on HN