Analysis of Morgan Stanley’s Andrew Slimmon Comment on Tech Valuations (Jan 2026)

On January 2, 2026, Andrew Slimmon, Senior Portfolio Manager at Morgan Stanley Investment Management, appeared on CNBC’s “Squawk Box” and claimed that tech stocks have lower valuations than the previous year [8]. A CNBC article analyzing 2026 market trends referenced Slimmon’s comment, noting that tech stocks led early 2026 trading despite 2025 year-end valuation concerns [1].

To evaluate this assertion, data from the Ginlix Analytical Database and external sources reveals a mixed sector landscape:

• Trailing P/E ratios
  : Microsoft (MSFT) saw its P/E decrease from ~37x (Jan 2025) to 34.02x (Jan 2026) [0][1]. However, NVIDIA (NVDA) and Apple (AAPL) experienced increases: NVDA’s P/E rose from ~33.4x to 47.18x [0][2], and AAPL’s from ~30.77x to 37.02x [0][3].
• Market and earnings growth
  : The Nasdaq Composite (tech-heavy) increased 20.87% over the past year, while US companies posted 12.1% EPS growth in 2025 [0][4], indicating partial fundamental justification for gains.
• Earnings context
  : Strong growth in select tech stocks (MSFT Q3 2025 EPS: $4.13, up from $3.65 in Q2 [0]; NVDA 77.9% YoY Q4 2024 revenue growth [5]) suggests forward-looking valuation metrics (likely referenced by Slimmon) could be lower due to expected earnings expansion. Analysts forecast double-digit 2026 S&P 500 EPS growth driven by AI [6].

1. Valuation metric nuance
   : Slimmon’s claim likely centers on forward P/E ratios (based on expected earnings) rather than trailing P/E (past performance). Strong earnings growth can reduce forward valuations, even if trailing ratios rise [0][5].
2. AI trade resilience
   : Despite 2025 year-end Nasdaq losses from valuation concerns [1], the Magnificent Seven and semiconductors led early 2026 gains, demonstrating ongoing AI trade momentum [1].
3. Sector divergence
   : Mixed P/E ratios across major tech stocks highlight the sector’s non-monolithic nature. Investors must evaluate individual companies based on earnings growth and prospects, not sector-wide metrics [0][1][2][3].

• Valuation divergence: Higher trailing P/E ratios for NVDA and AAPL create potential downside if market sentiment shifts [0][1][2][3].
• AI earnings visibility: Lack of clear AI-driven revenue growth in non-tech firms could pressure tech valuations [7].
• Fed policy uncertainty: Unexpected rate hikes could increase capital costs for growth-focused tech stocks [6].
• Sector concentration: Over-reliance on the Magnificent Seven poses risks if any underperform [7].

• Earnings-driven valuations: Strong growth at NVDA and MSFT could support attractive forward valuations [0][5].
• AI growth forecasts: 2026 double-digit EPS growth expectations (AI-driven) may benefit leading tech firms [6].
• Sector rotation potential: If forward valuation thesis holds, tech stocks could attract renewed investor interest [1].

This analysis reveals a mixed tech sector valuation landscape. Trailing P/E ratios vary across major stocks (MSFT down, NVDA/AAPL up), the Nasdaq has grown 20.87% with 12.1% US EPS growth, and the AI trade remains resilient. Slimmon’s comment likely refers to forward P/E ratios, not captured in trailing data, due to strong earnings growth. Decision-makers should monitor valuation divergence, AI earnings visibility, Fed policy, and sector concentration. This report provides objective context and is not investment advice [0][1][2][3][4][5][6][7][8].