Investor Sentiment on Large-Cap Tech Stocks in 2026
In 2026, concerns among investors regarding large-cap tech valuations and AI spending have intensified, significantly affecting tech stocks, particularly large caps, which are down approximately 3% as of February 4. The inflation-adjusted 10-year Shiller P/E ratio stands at over 40, the highest since the dot-com boom, spurring caution among investors.
Microsoft (NASDAQ: MSFT) has seen a pullback following record AI capital expenditures, which rose 66% year-over-year, despite a 110% increase in its remaining performance obligations totaling $625 billion. Currently, Microsoft trades at a low valuation of 26 times earnings, with 95% of analysts projecting a $600 price target, suggesting a potential 45% upside.
Oracle (NYSE: ORCL) showcases an even higher upside potential, with a median price target of $272 per share, equating to an 88% upside. The company plans to raise $50 billion for new data centers to support a contract backlog of $523 billion, a 438% increase from last year. However, investor skepticism around AI spending and debt levels poses risks for Oracle, making it a riskier but potentially rewarding investment compared to Microsoft.
