The five largest companies by market cap according to Yahoo Finance AlphaSpace<\/a> data are Nvidia (NVDA<\/a>), Apple (AAPL<\/a>), Alphabet (GOOG<\/a>, GOOGL<\/a>), Microsoft (MSFT<\/a>), and Amazon (AMZN<\/a>). <\/p>\n These companies have consistently had a premium since 2017.\u00a0 <\/p>\n The hyperscaler valuation convergence has been matched by a sharp derating in the relative valuation of software stocks, Oppenheimer said. The sector’s P\/E premium globally has fallen to around 20%, a far cry from the near 200% at the start of this century.\u00a0 <\/p>\n What’s more, performance leadership within the tech space has shifted from software to hardware, with memory and chip stocks seeing explosive demand for compute and a major step-up in earnings growth.\u00a0 <\/p>\n Oppenheimer explained, “It also marks a very big change from the dot.com era. Back then, valuations reached a much greater high, but they came down as stock prices collapsed. This time, prices have adjusted more modestly, but earnings have remained exceptionally strong.” <\/p>\n What else you need to know: Zooming out, tech stocks have struggled to gain traction this summer as investors have begun questioning whether the sector’s AI-driven rally has become too stretched after years of outsized gains. <\/p>\n The pressure has intensified of late as the largest technology companies, such as Oracle (ORCL<\/a>), Meta (META<\/a>), and Alphabet, continue to commit hundreds of billions of dollars to AI infrastructure, fueling concerns that capital spending is rising faster than the revenue those investments can generate.\u00a0Not helping sentiment is that these companies are using debt to fund their lavish spending. <\/p>\n<\/a> Valuations have come in a lot on tech names. \u00b7 Goldman Sachs <\/p>\n