The AI cohort just went back on sale — at a price not seen since ChatGPT launched

The market's most-watched names spent much of 2026 going sideways. The mega-cap "Magnificent Seven" cluster has traded inside a narrow band for most of the year, and the S&P 500 itself has chopped around near its high without extending far past it (it sits about 2% below its 52-week peak). But the earnings underneath those flat prices kept climbing. Put the two facts together and you get the number Wall Street has been leaning on all year: the AI leaders look cheaper than they have since ChatGPT launched in November 2022.

The mechanism is simple enough to hold in your head. A forward price-to-earnings ratio divides a stock (or index) by the profit analysts expect it to earn over the coming year — the price tag per dollar of anticipated earnings. When the price holds still and expected profit climbs, the ratio falls on its own. Same company, cheaper per dollar of projected profit.

The census backing that read comes from Goldman Sachs. Mega-cap technology trades around 27x forward earnings, and its premium over the rest of the S&P 500 has been cut to roughly 31% — the 24th percentile of the past decade and close to its 2022 lows. Its PEG ratio (price-to-earnings divided by expected growth, where about 1.0 means fair) sits near 1.4x, roughly matching the trough it reached in late 2022. The broader tech sector tells the same story: its multiple has fallen from about 32x in 2024 to the low-20s, near its 20-year average, and its premium over the index is the smallest since April 2020. Even at the index level, the S&P 500's forward P/E has compressed from about 22.2 earlier this year to roughly 19 by mid-September, below its five-year average — with its PEG touching 1.02 in late July, the lowest since June 2012.

The earnings side has breadth, too. Second-quarter blended profit growth came in near 47% year over year, eight of the eleven sectors posted double-digit growth, and third-quarter estimates have ticked up to roughly 29%.

But "not seen since ChatGPT launched" cuts both ways, and this is where the cheap reading deserves a deflation. The bargain exists because expected earnings are doing all the work. On the sales and cash-flow census the market never got cheap: market value relative to GDP sits at a record, the Shiller CAPE ratio runs near its dot-com high, and Bank of America flags that sales growth is lagging capital spending by a far wider-than-usual margin. If the AI buildout turns out to be a conventional capex cycle rather than an industrial revolution, BofA argues history implies a 15% to 30% derating.

So there are two readings here, and neither has to force the other to agree. On forward earnings, the AI cohort sells close to its pre-ChatGPT price. On sales and cash flow, it sells at record prices. Go figure. The last time these multiples were this low, the AI forecasts propping them up weren't yet baked into the tape — which is exactly why the discount looks like one.