Truist Wealth Chief Investment Officer Keith Lerner wrote in a report this week that the S&P 500 technology sector's forward price-earnings ratio is currently about 17 times, which is lower than the forward price-earnings ratio level of the general market for the first time since 2017. At its peak in October 2025, the sector's forward price-earnings ratio was as high as 32 times. “A price-earnings ratio of 32 times last year indicates that the market has digested a lot of positive news,” Lerner wrote. “Arguably, with the price-earnings ratio falling to nearly half of this level, the market has digested a lot of negative news.” Lerner believes there has been a “buyers' strike of some degree” in the technology sector. He said that chips are the sector most keenly responding to the slowdown in data center construction, and this risk continued to loom over the market during the midterm elections. But slowing the pace of construction may ease the cash flow consumption of the largest AI consumers. “If this forces a slower pace and may have a slight positive impact on cash flow, I think this could actually lengthen the entire cycle,” he said. Truist's advice is to maintain an overallocation to US large-cap stocks and increase its holdings of small-cap stocks — to partially hedge the risks posed by the market's cyclical sharp sell-off of large-cap technology stocks. The agency also stated that since 1946, the stock market has risen every time in the year after the midterm elections.

Truist Wealth Chief Investment Officer Keith Lerner wrote in a report this week that the S&P 500 technology sector's forward price-earnings ratio is currently about 17 times, which is lower than the forward price-earnings ratio level of the general market for the first time since 2017. At its peak in October 2025, the sector's forward price-earnings ratio was as high as 32 times. “A price-earnings ratio of 32 times last year indicates that the market has digested a lot of positive news,” Lerner wrote. “Arguably, with the price-earnings ratio falling to nearly half of this level, the market has digested a lot of negative news.” Lerner believes there has been a “buyers' strike of some degree” in the technology sector. He said that chips are the sector most sensitive to the slowdown in data center construction, and this risk continued to loom over the market during the midterm elections. But slowing the pace of construction may ease the cash flow consumption of the largest AI consumers. “If this forces a slower pace and may have a slight positive impact on cash flow, I think this could actually lengthen the entire cycle,” he said. Truist's advice is to maintain an overallocation to US large-cap stocks and increase its holdings of small-cap stocks — to partially hedge the risks posed by the market's cyclical sharp sell-off of large-cap technology stocks. The agency also stated that since 1946, the stock market has risen every time in the year after the midterm elections.