As the Middle East conflict sends shockwaves through global markets, the Magnificent Seven have stumbled. Top strategists weigh in on whether this is a once-in-a-generation buying opportunity or the beginning of a deeper tech rout.
NEW YORK — Even before US and Israeli attacks on Iran sent turmoil rippling through global markets, big US tech stocks were already under siege. Worries about an artificial intelligence bubble and runaway spending had investors on edge. Now, with oil prices spiking and geopolitical uncertainty at a fever pitch, the question gripping Wall Street is urgent: Is this a buying opportunity for names like Nvidia, Microsoft, and Amazon—or the moment to flee before the bubble bursts?
The S&P 500 technology sector peaked in late October and has since traded sideways to lower. By mid-March, the sector was down 5% for the year. But some individual stocks have fared far worse. Microsoft, for instance, has tumbled 18% since the start of 2026, while the broader “Magnificent Seven” cohort has seen steep declines across the board.
A Market Under Stress Test
For Dan Niles, tech investor and founder of Niles Investment Management, the current turbulence is less a reason to panic and more an opportunity to separate winners from losers.
“My view is the same now as coming into the year—you’ve got to be selective, so that hasn’t changed,” Niles said. “To some degree, the stuff going on has stress tested the market as well as individual technology names, and you kind of figured out who the winners and losers are during that stress test period of time. Google, as I’ve been saying for a while, will be one of the winners in AI. Not everybody is going to win.”
Niles pointed to Nvidia as a prime example of resilience. “Does Nvidia have more competitors today than they did three years ago? Absolutely. Are they still the leading-edge model out there? Absolutely. You can get Nvidia at a 23 multiple, and the revenues are growing at 70%. That’s the forecast.”
He also highlighted Cisco as an underappreciated play. “If you’re a big data center provider and you have all these data centers in different locations… well, you’re going to need to network those together, and Cisco can do it. Cisco’s a good risk-adjusted way of playing this.”
The Oil Wild Card
A major wild card for the market is the price of oil. With the conflict threatening energy supplies across the Middle East, strategists warn that sustained high oil prices could create significant headwinds for stocks and the global economy.
Sam Stovall, chief investment strategist at CFRA Research, said he is concerned that oil could trade above $100 per barrel for an extended period. Still, he expects the S&P 500 to end the year up about 6%.
“There’s no reason to feel like you have to do anything because just remind yourself of the speed with which the market tends to get back from pullbacks, corrections and bear markets,” Stovall said.
He noted that for the S&P 500, a 5% to 10% pullback takes about six weeks to recover, while a decline of up to 20% takes an average of four months to return to breakeven. From a 20% to 40% decline, recovery has taken an average of 13 months. “Mega meltdowns”—declines of 40% or more—have taken an average of five years.
Resilience Beneath the Surface
Julian Emanuel, head of US equity, derivatives and quantitative research at Evercore ISI, sees underlying strength despite the volatility.
“AI disruption concerns, credit concerns, now an oil price shock and still high valuations historically, and basically, the market has been range-bound between 6,520 and 7,000 for the S&P 500 for six solid months,” Emanuel said. “That to us shows underlying resilience. Could it break through the bottom end of the range for a short time? You can’t rule out anything in a volatile environment like this.”
He noted a quiet but significant shift beneath the surface: “One of the untold stories for the last several weeks is that software and broader technology sectors have really started outperforming the S&P 500. This may be a sort of a stabilization rally, but in our mind, it really is what I would call the first green shoots of investors being willing to re-engage with technology and willing to start tiptoeing back into the software sector specifically.”
The ‘HALO’ Trade Emerges as Safe Haven
Amid AI fears and concerns about private credit issues plaguing software and other tech stocks, investors have gravitated toward the so-called “HALO” trade—short for “Heavy Assets, Low Obsolescence.” These are industries with hard assets that would be difficult for AI to disrupt, such as energy, materials, industrials, and consumer staples—the best-performing S&P sectors year-to-date.
Emanuel suggested that some fund managers appear underweight technology, and individual investors may lead the charge back in. “The public, who has been right consistently relative to institutional investors since the pandemic, is waiting patiently,” he said.
Tech Looks Cheaper—But Is That Enough?
Despite the recent declines, tech earnings expectations remain robust. For all of 2026, tech earnings are projected to grow by 35%, compared to 14.3% for the overall S&P 500.
“Right now, the S&P tech sector is trading at an 11% discount to its five-year average P/E,” Stovall noted.
However, he cautioned investors to remain patient. “My feeling is if you have cash on the sideline, leave it there. Wait,” he said, advising a “wait and see” approach rather than jumping into new tech positions now.
A Historical Caveat for Tech Investors
While technology was the market leader during the stock market’s recent gains, it can also be a leader to the downside in bear markets—corrections of 20% or more. Stovall noted that tech stocks fell an average of 46% in all bear markets since 1990, while the S&P 500 declined by an average of 37%.
“The bubble started leaking enthusiasm starting at the tech peak in late October,” Stovall said.
Two Paths Forward
For risk-tolerant investors with a long-term horizon, the pullback in names like Nvidia, Amazon, and Microsoft may represent an attractive entry point. Niles argues that the fundamentals remain intact for select players, and valuations have become more reasonable.
For those with lower risk appetite, however, the combination of geopolitical uncertainty, oil price shocks, and lofty valuations suggests caution. As Stovall put it: “There’s no reason to feel like you have to do anything.”
As the Iran conflict continues to unfold and oil markets remain volatile, investors face one of the most uncertain market environments in years. Whether the current tech pullback proves to be a buying opportunity or the start of a deeper correction may ultimately depend on how the geopolitical situation—and the price of oil—resolves in the weeks ahead.
