Nvidia and Micron Technology are examples of companies whose forward price/earnings ratios have fallen dramatically as profit estimates have soared.
For most Big Tech stocks, forward price/earnings ratios have declined recently, and it is not only because share prices have fallen.
Forward price/earnings ratios are current stock prices divided by consensus 12-month earnings-per-share estimates among analysts working for brokerage and research firms. For this article, the forward P/E ratios are based on LSEG's "smart estimates," which are adjusted weekly to remove extreme outliers among the analysts' estimates, as well as individual estimates that have not been revised recently.
This chart shows rolling forward P/E ratios for the S&P 500's information technology sector and for the full S&P 500 over the past year:
The S&P 500 information technology sector's rolling forward price/earnings ratio declined to 26 as of the close on Jan. 6 from 31.8 at the end of October, even though the sector's weighted price had declined only 4%.
The P/E ratios on the chart are updated weekly by LSEG. Since the end of October, the weighted forward P/E for the information technology sector has declined to 26 from 31.8. For the full S&P 500, the forward P/E has declined to 21.9 from 23.3.
During the last two months of 2025, you probably saw headlines in the financial media about declining stock prices for Big Tech. If we exclude dividends, the S&P 500's information technology sector fell 4.1% from the end of October through Tuesday, while the full index was up 1.5%.
The biggest driver of the notable decline in the information technology sector's forward P/E ratio has been increases in analysts' EPS estimates.
The following table shows how the rolling 12-month EPS estimates have been revised for Big Tech stocks since the end of October. But the S&P 500's information technology sector actually excludes some well-known Big Tech names.
Among the group of megacap tech companies know as the Magnificent Seven (Nvidia (NVDA), Apple, Alphabet, Microsoft, Amazon, Meta Platforms and Tesla), Alphabet and Meta are actually in the communications services sector, while Amazon and Tesla are in the consumer discretionary sector. The sectors are assigned by S&P Dow Jones Indices, a unit of S&P Global.
So we added those four Magnificent Seven companies to the components of the S&P 500 information technology sector and then sorted the list by market capitalization. Here is how forward P/E ratios and rolling 12-month consensus EPS estimates have changed for the largest 20 "tech stocks" in the S&P 500 since Oct. 31. You might need to scroll the table or flip your screen to landscape to see all of the data
Some notes about the data:
Among the 20 stocks, all have lower forward P/E ratios than they did at the end of October, except for Alphabet and two companies that provide equipment and services used by semiconductor manufacturers: Lam Research and Applied Materials.
Micron’s forward P/E has declined even though its stock has risen by 53% since the end of October. This is because its rolling 12-month consensus EPS estimate has more than doubled as prices for computer storage memory have soared.