Valuation compression

Since the recent peak, US technology stocks are down only around 2%, yet valuations have corrected much more meaningfully. The adjustment has therefore taken place through multiple compression rather than price declines, while earnings continue to grow. In effect, fundamentals are catching up with valuations. With the spread now close to -26%, a significant part of the de-rating already appears behind us. When profits expand while multiples contract, return prospects tend to improve. In that sense, the current phase looks less like a sell-off and more like a normalization, which is typically where opportunities begin to re-emerge — including within large US technology names, as long as growth remains intact.