The tech sector is experiencing a downturn, having fallen approximately 2.15% year-to-date (YTD) as of February 23, 2026, after achieving nearly 34% gains in 2025. This decline follows the NASDAQ’s all-time high in October 2025 and is largely attributed to underperformance among major tech companies, leading to increased interest in defensive sectors.
Several prominent tech stocks have entered correction territory, including Amazon and Meta Platforms, both down over 19% from their one-year highs. Palantir has seen a nearly 37% drop, while HubSpot is down more than 43% YTD. Analysts suggest this downturn may present a buying opportunity, as stocks like Adobe and Paychex show significant potential upside based on their current Relative Strength Index (RSI) and valuation metrics.
Despite fears of a bear market, Morgan Stanley’s Andrew Slimmon notes that late-stage bull markets can still yield positive returns, especially in their fourth year, which could signal a rebound for investors willing to take on risk. Stocks like Adobe and Accenture display attractive forward price-to-earnings ratios and anticipated growth rates, suggesting potential recovery as market dynamics shift.
