V-Shaped Bottom 2.0?
Thus far, 2026 is shaping up eerily similarly to 2025. In 2025, U.S. equity markets suffered a swift and violent correction after President Trump unveiled his ‘Liberation Day’ blanket tariff policy. However, after a brief multi-week correction, equities began to price in the tariff news, climb the proverbial wall of worry, and create a V-shaped recovery. Earlier this year, the same price action occurred after the U.S. bombed Iran. Stocks corrected and recovered swiftly in a V-shaped fashion.
Image Source: TradingView
The Trump Seasonality is Repeating
History doesn’t always repeat itself, but it does tend to rhyme. As you can see from the seasonality chart below, the Trump Presidency Cycle suggests that the S&P 500 Index corrects early in the year, bottoms in spring, and runs into year-end. Once again, stocks are following the pattern closely.
Image Source: Carson Investment Research, FactSet
Tech Insider Buying Surges to Record High
Although executives may sell their stock for any number of reasons, they buy only for one: they believe it will appreciate in price. For investors, it’s worth noting when executives have skin in the game and deploy their own personal funds to purchase stock in the open market. Over the past six months, tech stock insiders have bought more shares than ever in history.
Image Source: Zacks Investment Research
Tech Valuations Remain Cheap
While tech stocks have appreciated nicely over the past several months, their valuations remain extremely reasonable. The forward P/E ratio for the tech sector is below the 10-year average and at levels not seen in over a year.
Image Source: Zacks Investment Research
Meanwhile, despite NVIDIA’s (NVDA) massive multi-year move, its price-to-earnings growth ratio is at decade lows. Other big tech giants such as Microsoft (MSFT) also trade at valuations that are hovering near multi-year lows.
Image Source: Zacks Investment Research
Tech Stocks are Producing Juicy Profits
A key differentiator between the late 1990s and today is that stock moves are driven by real fundamentals. For instance, Micron (MU) is expected to generate more profit this year than it generated over the previous two decades combined!
Image Source: Zacks Investment Research
Other AI-related companies, such as SanDisk (SNDK) and Marvell (MRVL) are also reporting record profits.
Bottom Line
Backed by historic corporate profits, insider buying, and bargain valuations, tech stocks are proving that the 2026 rally is built on rock-solid fundamentals, not hot air.
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Microsoft Corporation (MSFT): Free Stock Analysis Report
Micron Technology, Inc. (MU): Free Stock Analysis Report
NVIDIA Corporation (NVDA): Free Stock Analysis Report
Sandisk Corporation (SNDK): Free Stock Analysis Report
Marvell Technology, Inc. (MRVL): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).