Big Tech Stocks Still Aren’t Cheap

In times like this, when people in Silicon Valley are gripped by a sense of “panic”—as my colleague Kate Clark wrote today—it’s tempting to think we’ve hit bottom in the yearlong market sell-off. Just as you might think it’s time to sell stocks when your neighbors are giving you stock tips, maybe it’s time to buy when everyone is freaking out. But if you take a look at the valuations of what are arguably the safest bets among big tech stocks, you’ll see they aren’t particularly cheap on a historical basis. That tells you things could still get worse in 2023. What a cheery thought!

Take Google owner Alphabet, arguably the best positioned of the digital ad firms. It has lately been trading at a price-earnings multiple of around 19, whereas last year it went as high as 33, according to data firm Koyfin. But over a longer time horizon, Alphabet has been a lot lower than where it is now. Its multiple was as low as 12 in late 2008 and nearly as low in 2012, according to data from Koyfin.