S&P says the U.S. economy is capable of absorbing a potential equity market pullback driven by investors reassessing stretched tech and AI-related valuations

S&P says the U.S. economy is capable of absorbing a potential equity market pullback driven by investors reassessing stretched tech and AI-related valuations

S&P Affirms U.S. Economy’s Resilience Amid Tech Valuation Reassessment

The S&P Global Ratings has stated that the U.S. economy remains well-positioned to weather a potential equity market pullback driven by investors reevaluating stretched valuations in the technology and AI sectors. This assessment comes as major tech stocks face significant declines in 2026, reflecting growing skepticism about the profitability of massive AI investments.

Leading technology companies have seen billions erased from their market values amid concerns over the ROI of AI initiatives. Microsoft (MSFT) has lost approximately $613 billion in market value, with shares down 17% year-to-date, as competition intensifies from rivals like Google and Anthropic. Amazon (AMZN) has shed $343 billion, or 13.85%, while Nvidia (NVDA), Apple (AAPL), and Alphabet (GOOGL) have collectively lost over $430 billion. The selloff underscores a shift in investor sentiment, with markets now prioritizing near-term earnings clarity over long-term AI ambitions.

Despite these declines, S&P emphasizes that the broader economy's diversification and strength in non-tech sectors mitigate systemic risks. For instance, TSMC (TSM), Samsung Electronics, and Walmart (WMT) have added $293 billion, $272 billion, and $179 billion in market value, respectively, since the start of 2026. This countersbalance suggests that while tech-driven growth remains pivotal, other industries are gaining traction, reducing reliance on a single sector.

S&P's confidence aligns with historical patterns where market corrections in high-growth industries have not derailed macroeconomic stability. However, analysts caution that sustained pressure on tech valuations could signal a broader recalibration of risk premiums in equity markets. For now, the U.S. economy's structural resilience—bolstered by robust consumer demand and corporate profitability— appears to insulate it from severe fallout.

Investors are advised to monitor capital allocation trends and sectoral rebalancing as key indicators of market equilibrium in the AI era.