Tech stocks haven't been this cheap since OpenAI launched ChatGPT

Finally, there may be values to be had in the tech patch.

The S&P 500's (^GSPC) tech sector forward price-to-earnings ratio has declined from 32 times last October to approximately 21 times, Truist chief investment officer Keith Lerner noted. At these levels, tech valuations are roughly where they stood when OpenAI (OPAI.PVT) launched ChatGPT in November 2022.

At the same time, forward earnings growth for tech remains by far the strongest in the market, with estimates rising approximately 20% over just the past three months, Lerner said.

"There are still risks and open questions around circular financing and the pace of new model development. Yet, with tech's relative valuation premium down to approximately 9%, near the lowest level of the past decade, the sector appears to be reflecting at least some of that uncertainty," Lerner explained, adding that the sector represents a "relative opportunity" for investors right now.

Tech stock valuations are undergoing the compression Lerner detailed, as stubborn inflation and elevated Treasury yields — with the 10-year (^TNX) yield hovering near 5% — increase discount rates. In turn, that directly erodes the present value of future earnings projections.