As the Middle East conflict roils global markets, the Magnificent Seven have taken a hit. Strategists weigh in on whether this is a buying opportunity or the beginning of a deeper tech sell-off.
NEW YORK — Even before US and Israeli attacks on Iran sent shockwaves through global markets, big US tech stocks were already under pressure. Worries about overspending on artificial intelligence and the specter of an AI bubble had investors on edge. Now, with oil prices soaring and geopolitical uncertainty mounting, the question facing investors is stark: Is this a buying opportunity, or the beginning of a prolonged tech rout?
The S&P 500 technology sector peaked in late October and has since traded sideways to lower. By mid-March, the sector was down 5% for the year—but some individual names have fared far worse. Microsoft, for instance, has tumbled 18% since the start of 2026.
Tech Under Stress Test
For Dan Niles, tech investor and founder of Niles Investment Management, the current turbulence offers a way to separate winners from losers.
“My view is the same now as coming into the year—you’ve got to be selective, so that hasn’t changed,” Niles said. “To some degree, the stuff going on has stress tested the market as well as individual technology names, and you kind of figured out who the winners and losers are during that stress test period of time. Google, as I’ve been saying for a while, will be one of the winners in AI. Not everybody is going to win.”
Niles pointed to Nvidia as a standout despite increased competition. “Does Nvidia have more competitors today than they did three years ago? Absolutely. Are they still the leading-edge model out there? Absolutely. You can get Nvidia at a 23 multiple, and the revenues are growing at 70%. That’s the forecast.”
He also highlighted Cisco as a compelling play. “If you’re a big data center provider and you have all these data centers in different locations… well, you’re going to need to network those together, and Cisco can do it. Cisco’s a good risk-adjusted way of playing this.”
The Oil Wild Card
A major wild card for the market is the price of oil. With the conflict threatening energy supplies across the Middle East, strategists warn that sustained high oil prices could create significant headwinds for stocks and the global economy.
Sam Stovall, chief investment strategist at CFRA Research, said he is concerned that oil could trade above $100 per barrel for an extended period. Still, he expects the S&P 500 to end the year up about 6%.
“There’s no reason to feel like you have to do anything because just remind yourself of the speed with which the market tends to get back from pullbacks, corrections and bear markets,” Stovall said.
He noted that for the S&P 500, a 5% to 10% pullback takes about six weeks to recover, while a decline of up to 20% takes an average of four months to return to breakeven. From a 20% to 40% decline, recovery has taken an average of 13 months. “Mega meltdowns”—declines of 40% or more—have taken an average of five years.
Market Resilience or False Calm?
Julian Emanuel, head of US equity, derivatives and quantitative research at Evercore ISI, sees underlying strength despite the volatility.
“AI disruption concerns, credit concerns, now an oil price shock and still high valuations historically, and basically, the market has been range-bound between 6,520 and 7,000 for the S&P 500 for six solid months,” Emanuel said. “That to us shows underlying resilience. Could it break through the bottom end of the range for a short time? You can’t rule out anything in a volatile environment like this.”
He noted a shift beneath the surface: “One of the untold stories for the last several weeks is that software and broader technology sectors have really started outperforming the S&P 500. This may be a sort of a stabilization rally, but in our mind, it really is what I would call the first green shoots of investors being willing to re-engage with technology and willing to start tiptoeing back into the software sector specifically.”
‘HALO’ Trade Emerges as Safe Haven
Amid AI fears and concerns about private credit issues plaguing software and other tech stocks, investors have gravitated toward the so-called “HALO” trade—short for “Heavy Assets, Low Obsolescence.” These are industries with hard assets that would be difficult for AI to disrupt, such as energy, materials, industrials, and consumer staples—the best-performing S&P sectors year-to-date.
Emanuel suggested that some fund managers appear underweight technology, and individual investors may lead the charge back in. “The public, who has been right consistently relative to institutional investors since the pandemic, is waiting patiently,” he said.
Valuation Story: Tech Looking Cheaper?
Despite the recent declines, tech earnings expectations remain robust. For all of 2026, tech earnings are projected to grow by 35%, compared to 14.3% for the overall S&P 500.
“Right now, the S&P tech sector is trading at an 11% discount to its five-year average P/E,” Stovall noted.
However, he cautioned investors to remain patient. “My feeling is if you have cash on the sideline, leave it there. Wait,” he said, advising a “wait and see” approach rather than jumping into new tech positions now.
A Tale of Two Strategies
For risk-tolerant investors with a long-term horizon, the pullback in names like Nvidia, Amazon, and Microsoft may represent an attractive entry point. But for those with lower risk appetite, the combination of geopolitical uncertainty, oil price shocks, and lofty valuations suggests caution.
As Emanuel put it: “The bubble started leaking enthusiasm starting at the tech peak in late October.” Whether that leak turns into a full rupture—or merely a pressure release before the next leg up—remains to be seen.
For now, investors are navigating one of the most uncertain market environments in years, with the Iran conflict adding a volatile new layer to an already complex landscape.
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