Chung Wu Investment Group sees tech fundamentals holding firm despite selloff
XLK•XLK•XLK•XLK•Chung Wu Investment Group said technology fundamentals remain strong despite the sector underperforming the S&P 500 by 9.3% quarter to date. It cited a 32% contraction in forward price-to-earnings multiples and projected free cash flow growth of 52% in 2026 and 46% in 2027.
Chung Wu Investment Group said technology’s long-term outlook remains positive despite the sector underperforming the S&P 500 by 9.3% quarter to date. Next-12-month price-to-earnings multiples have contracted 32% in 2026, leaving technology trading at a discount to the S&P 500 for the first time since 2019.
Consensus 2027 earnings-per-share estimates have risen 3.4% since earnings season began, and technology earnings growth is projected to outpace the rest of the index by 37%. Major hyperscalers’ cloud backlogs surged 141% to $1.8 trillion during third-quarter 2026 earnings. Sector-wide free cash flow is projected to rise 52% in 2026 and 46% in 2027 despite hyperscalers’ infrastructure spending.
