After a punishing start to 2026 that wiped billions of dollars off technology valuations and briefly pushed the sector back toward pre-ChatGPT pricing levels, Wall Street is beginning to see the outlines of a renewed rally.
Software stocks, led by Oracle’s double-digit jump, saw a sharp rebound on Monday, with the development being interpreted not as a fleeting bounce but as the opening phase of a broader technology recovery.
The rally comes at a moment when investor sentiment toward growth stocks is undergoing a rapid reassessment. For much of the first quarter, technology shares were battered by geopolitical instability, particularly the Iran conflict and the resulting energy-price shock, alongside persistent concerns that the AI boom had left valuations overstretched. That correction, however, has now compressed multiples to levels many strategists consider historically attractive.
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At the forefront of Monday’s rebound was Oracle, whose shares surged as much as 12%, making it one of the strongest performers in both software and the broader technology sector. The stock’s advance helped propel the software complex to its best day in roughly a year, reinforcing the view that institutional investors are beginning to rotate back into beaten-down AI and enterprise software names.
The significance of Oracle’s move goes beyond a single-session price spike. The company has become a proxy for investor confidence in enterprise AI infrastructure spending. Its cloud expansion, large contracted revenue backlog, and positioning in database and data-center infrastructure make it a bellwether for whether legacy software companies can successfully monetize AI rather than be displaced by it.
What makes the current setup especially compelling for bulls is the sharp compression in valuations.
“Tech valuations are now LOWER than they were when ChatGPT was announced,” Adam Kobeissi, founder of The Kobeissi Letter, said. “As the Iran War drives markets lower, AI is only getting bigger. Record highs are on the horizon.”
That assessment has found support among other market voices. Apollo chief economist Torsten Slok has similarly noted that sector multiples have fallen from around 40 times earnings to roughly 20 times, effectively erasing much of the premium built during the AI frenzy of 2023 through 2025.
This reset is crucial because, unlike previous speculative bubbles, earnings expectations have not collapsed alongside prices.
According to BlackRock, the technology sector is still projected to deliver approximately 43% earnings growth in 2026, a remarkably strong figure that suggests the selloff was driven more by macro fear and profit-taking than by a deterioration in corporate fundamentals.
That divergence between falling valuations and stable earnings estimates is one reason strategists increasingly describe the current moment as a buy-the-dip opportunity rather than the start of a prolonged bear market.
Daniel Newman, chief executive of Futurum, described the present environment as “a historically opportune moment” to re-enter the AI trade.
The AI story itself remains the central pillar of the bull case. Even as war-driven volatility pressured markets, the underlying capital expenditure cycle tied to artificial intelligence has continued to expand. Hyperscalers and enterprise software companies are still investing massive sums in compute, cybersecurity, data storage, and AI tools. This suggests that the secular demand story remains intact even as share prices undergo cyclical corrections.
Importantly, investors are becoming more selective. Rather than buying technology indiscriminately, capital is increasingly flowing toward companies viewed as essential infrastructure providers or those seen as least vulnerable to AI disintermediation. This includes names such as Microsoft, Alphabet, Meta, Amazon, and NVIDIA, all of which remain deeply embedded in the AI ecosystem through cloud services, chips, platforms, or advertising engines.
Cybersecurity is another area drawing heightened attention. As geopolitical risks intensify and AI tools raise the stakes around enterprise security, firms such as CrowdStrike, Palo Alto Networks, and Zscaler are increasingly being viewed as structural beneficiaries of the next technology upswing.
Another major catalyst now in focus is earnings season. First-quarter corporate results are expected to begin shortly, and analysts broadly expect technology to once again lead profit growth across the S&P 500. This matters because earnings will determine whether the recent rally develops into a sustained re-rating.
Analysts believe that if large-cap tech companies deliver resilient revenue growth and strong AI monetization metrics, investors may gain the confidence needed to push the sector back toward all-time highs.
Goldman Sachs has already pointed to “secular growth” stocks, many of them concentrated in technology, as best positioned for the next expansion phase. That view is reinforced by the market’s gradual shift away from purely macro-driven selling toward stock-specific fundamental analysis.
The broader narrative, therefore, is one of transition – as demonstrated by the first quarter, which was defined by de-risking, war headlines, and multiple compressions. The second quarter is expected to increasingly be defined by earnings validation, AI monetization, and renewed institutional positioning.
Monday’s software rally may prove to be the first meaningful signal that investors believe the valuation reset is complete and that the next leg of the AI-driven tech cycle is beginning. Analysts note that if earnings confirm that thesis, the sector could indeed be laying the groundwork for a fresh run toward record territory.