Growth investors have been moving capital away from technology stocks throughout 2026.
Throughout 2026, there has been a pronounced shift on Wall Street away from technology stocks. The combination of waning enthusiasm for the artificial intelligence (AI) narrative and big tech's accelerating capital spending on infrastructure build-outs has paved the way for the "Great Rotation" -- a broad shift in investor preference away from AI stocks and toward value stocks and companies that produce tangible, physical goods.
The sell-offs that this transition induced have left Microsoft (NASDAQ: MSFT), Amazon (NASDAQ: AMZN), and Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG) trading at discounts.
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Far more than cloud infrastructure providers, each of these companies is weaving AI into durable, multiproduct ecosystems spanning enterprise software, consumer experiences, logistics, advertising, and even orbital infrastructure. These trillion-dollar giants aren't just renting AI compute. They are quietly designing and owning the entire AI flywheel.
Microsoft's valuation tells quite the bargain story. Its forward price-to-earnings (P/E) ratio of 21 is a 45% discount to its 2024 peak multiple, even as revenues from its Azure cloud services segment have been growing by nearly 40% year over year in recent quarters. The market is pricing Microsoft like a mature technology dinosaur and ignoring the AI software that's driving the company's various revenue streams.
Beyond Azure, Microsoft has built an end-to-end enterprise AI operating system thanks to its multibillion-dollar partnership with OpenAI. OpenAI's models are embedded directly into Microsoft Copilot for Microsoft 365. This transition brought much-needed innovation to legacy product lines like Excel, PowerPoint, Teams meetings, and Outlook -- each of which now features AI-native functionality.
At the enterprise level, GitHub Copilot is being used to write new code at Fortune 500 companies, while Dynamics 365 Copilot is helping automate critical applications like sales pipelines and supply chain forecasting in real time. On the consumer side, the company's Surface devices now ship with dedicated neural processing units. Meanwhile, Microsoft's custom Maia accelerator chips are being deployed across its data centers in an effort to slash inference costs relative to fully relying on off-the-shelf GPUs.