Should You Really Buy Tech Stocks Now? History Offers a Surprising Answer That's Strikingly Clear.

Technology stocks, particularly those focused on artificial intelligence (AI), have led stock market gains over the past few years. This is because investors were eager to bet on this potentially game-changing space. AI demonstrated its ability to make companies and individuals more efficient, and over time, this could lead to significantly higher earnings.

Certain companies, such as chip designer Nvidia and cloud service provider Alphabet, were early winners -- generating explosive revenue growth -- and investors piled into them, driving the shares higher too. For example, Nvidia and Alphabet saw their stock prices climb in the triple digits over the past three years.

All of this resulted in high valuations for many tech players, and late last year, investors worried about the sustainability of such levels. They also were concerned about the high levels of spending on AI and whether the revenue opportunity would justify that spending level. This, along with general worries about the economy and geopolitical environment, weighed on tech stocks early in the year.

They have since rebounded, but in recent days, have been in the doldrums once again. Should you really buy tech stocks now? History offers a surprising answer that's strikingly clear.

Image source: Getty Images.

What happened with AI stocks

First, let's consider the full story over the past several months, with a particular focus on AI stocks. As mentioned, investors began to worry about valuations and high spending on AI. And then other general market worries prompted investors to rotate into stocks seen as "safer" bets, such as healthcare players or companies known for dividend growth.

This significantly brought down valuations of many AI stocks, including those of well-established companies like the "Magnificent Seven." These are the top tech stocks that have generated solid growth in recent years and led gains in the S&P 500. Referring again to Nvidia and Alphabet, both "Magnificent Seven" stocks, we can see that they're cheaper today than they were late last year.

NVDA PE Ratio (Forward) data by YCharts

Meanwhile, AI companies continued to deliver revenue growth, and the message has been unanimous: Demand for AI capacity remains high.

All of this helped AI stocks, and growth stocks in general, recover after a difficult first quarter. But, in recent days, tech stocks have faced some pressure. This may simply be as certain longtime investors lock in profits or as some investors sell older positions in order to free up cash for recent and upcoming tech initial public offerings. Space Exploration Technologies, or SpaceX, just completed a record IPO and made it a big event for retail investors by earmarking about 20% of shares for them. AI labs OpenAI and Anthropic both have filed confidentially with regulators for IPOs, but dates for those operations haven't been set.

Tech declines may also follow any small disappointment. For example, when Broadcom reported earnings earlier this month, it didn't raise its forecast for AI chip sales -- and the stock fell.

What history shows

So, let's get back to our question: Should you really buy tech stocks now, with the Nasdaq Composite stumbling once again? A look at history shows the following. In April 2025, stocks sank amid concerns about potential U.S. tariffs on imports -- but they weren't down for long and went on to rebound and gain.

^IXIC data by YCharts

And if we look at a longer period, for example, the past 10 years, we can see the same pattern. Whenever the Nasdaq went through tough times, it always recovered and increased significantly in the months and years to follow.

^IXIC data by YCharts

The surprising thing history tells us is that when stocks are falling, this is actually the best time to buy them. Of course, you may worry that they'll decline further once you've made your purchase. But a look at the chart just above should be reassuring: It wouldn't have mattered if you had invested in the Nasdaq at the start of its decline or when it reached its lowest. Over time, you still would have scored a big win. So you don't have to worry about timing the market. As long as a stock's valuation and future prospects look good, you may consider making your move.

All of this means that, yes, now is a fantastic time to pick up quality tech stocks -- and potentially generate explosive gains over the long run.

Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Broadcom, and Nvidia. The Motley Fool has a disclosure policy.