Tech Is Dragging Down US Large Cap Stocks (4 Charts)
Tech Is Dragging Down US Large Cap Stocks (4 Charts)
US large cap stocks have underperformed international and US small cap stocks in 2026 thus far. One reason for the underperformance is the information technology sector, which includes companies like Nvidia, Apple, and Microsoft, and comprises 33% of the US stock market.
- The information technology sector has declined since last fall, whereas the balance of the US stock market, ex-technology, has continued to post positive returns (Fig. 1).
- Price declines, along with rising earnings expectations (Fig. 2), have pushed forward-looking valuations for technology to more-reasonable levels (Fig. 3).
- Overall, forward-looking valuations are reasonable across equity markets (Fig. 4).
One note of caution: US growth stocks, and technology in particular, could be subject to further underperformance if earnings growth comes in below the high expectations that are currently in place. We remain underweight US growth stocks in favor of US small cap.
Fig. 1: Technology has underperformed the rest of the market recently
Source: Bloomberg, Mill Creek. As of 2/19/2026.
Fig. 2: Technology sector, estimated earnings per share growth over next 12 months
Source: Bloomberg, Mill Creek. As of 2/19/2026.
Fig. 3: 12-month forward estimated price-to-earnings
Source: Bloomberg, Mill Creek. As of 2/19/2026.
Fig. 4: Valuations and earnings summary across equity markets
Source: Bloomberg, Mill Creek. As of 2/19/2026.
Disclosures & Important Information
Any views expressed above represent the opinions of Mill Creek Capital Advisers ("MCCA") and are not intended as a forecast or guarantee of future results. This information is for educational purposes only. It is not intended to provide, and should not be relied upon for, particular investment advice. This publication has been prepared by MCCA. The publication is provided for information purposes only. The information contained in this publication has been obtained from sources that
MCCA believes to be reliable, but MCCA does not represent or warrant that it is accurate or complete. The views in this publication are those of MCCA and are subject to change, and MCCA has no obligation to update its opinions or the information in this publication. While MCCA has obtained information believed to be reliable, MCCA, nor any of their respective officers, partners, or employees accepts any liability whatsoever for any direct or consequential loss arising from any use of this publication or its contents.
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