Goldman Sachs issued a note on Tuesday arguing that the technology sector was increasingly attractive for investors, citing valuations that had fallen below those of the broader stock market.
That note landed the day before a relief rally sent the Nasdaq up nearly 3.5 percent on Wednesday, validating the thesis in the short term and raising questions about whether the sector’s relative underperformance this year is setting up a more durable recovery.
Technology, financials and industrials led Wednesday’s gains across the major indices. The Nasdaq’s 3.5 percent advance outpaced the Dow’s 2.9 percent and the S&P 500’s 2.5 percent, reflecting the sector’s disproportionate sensitivity to the oil-inflation-interest rate chain that had been compressing growth stock multiples throughout the war period.
Semiconductor stocks were the standout within technology. ASML surged 7.8 percent, receiving an additional boost from a TD Cowen price target increase on top of the broader macro relief. Applied Materials gained 6.8 percent. Micron Technology jumped 9 percent ahead of the open. Taiwan Semiconductor Manufacturing climbed 6 percent. The common thread through all of these is exposure to AI infrastructure spending, which investors had been discounting against fears that elevated energy costs and supply chain disruptions would crimp the capital expenditure plans of cloud and data centre operators.
Meta’s 6.5 percent gain on Wednesday was powered by both the macro environment and a company-specific catalyst. The social media group launched its Muse Spark AI model, developed by Meta Superintelligence Labs under chief AI officer Alexandr Wang. The proprietary model represents a significant departure from Meta’s previous open-source approach to AI development and signals a strategic decision to prioritise monetisation and performance over ecosystem building.
The broader pattern on Wednesday, with roughly 75 percent of S&P 500 stocks advancing, suggests the relief was not confined to a single sector or theme. Small-cap stocks, which had been particularly hard hit by the war’s impact on domestic consumer confidence and borrowing costs, made modest gains, with the Russell 2000 edging up around 0.2 percent.
Federal Reserve Vice Chair Philip Jefferson had noted the day before that elevated energy prices complicated the Fed’s inflation outlook. With oil now substantially lower, the path back to a September rate cut has become marginally more plausible. That calculus, more than any individual stock story, underpins the argument for continued recovery in rate-sensitive sectors including technology and real estate.
Whether the Goldman thesis holds beyond Wednesday depends on the durability of the ceasefire and the normalisation of energy markets. The bank’s note argued that technology’s relative valuation had created genuine opportunity. A single session of relief buying does not confirm the thesis, but it does confirm that the market is prepared to price it in quickly when conditions allow.
