How Tech Stocks Are Underperforming Despite Rising Dollar Values

Measuring Assets Against Gold

When we measure an asset's performance in gold terms, we're essentially answering the question: "How many ounces of gold could this asset purchase over time?" This approach removes the effects of inflation and currency debasement, providing a clearer picture of an asset's true value trajectory.

For tech stocks, this measurement is particularly revealing. While the Nasdaq has shown impressive nominal gains in dollar terms since the 2008 financial crisis, its performance looks significantly different when priced in gold ounces. This divergence highlights the impact of massive monetary expansion and inflation on asset valuations.

"To see the true picture of any investment, one should look beyond nominal currency returns and consider how it performs against gold or other hard assets that retain value through time."

— Ali Karadag, CEO Blackmill Solutions

Benefits of a Gold-Based Perspective

Looking at tech stocks through the lens of gold offers several analytical advantages:

• Inflation Adjustment: Gold-denominated returns automatically adjust for inflation, showing the true change in purchasing power.
• Historical Comparison: Gold provides a consistent measuring stick across different monetary regimes and time periods.
• Reality Check: When assets significantly underperform in gold terms, it can signal overvaluation or unsustainable conditions in dollar-denominated markets.
• Cycle Identification: Asset-to-gold ratios often reveal long-term market cycles that might be obscured in nominal price charts.

Timeline and Key Events

The current "gold recession" for tech stocks began to take shape in early 2021, as inflation concerns started mounting. The Consumer Price Index showed a significant year-over-year increase of 2.62% in March 2021, signaling the start of what would become the highest inflation in four decades.

By November 2021, the Nasdaq-to-gold ratio reached its peak, after which technology stocks began to steadily lose value relative to gold. This divergence became more pronounced in March 2022, when the Federal Reserve initiated its aggressive interest rate hiking cycle, creating a particularly challenging environment for growth-oriented tech companies.

Throughout 2022 and 2023, despite occasional rallies in dollar terms, tech stocks continued to underperform gold. The trend accelerated in early 2025, with gold reaching new all-time highs above $3,030 per ounce amid escalating Russian tensions and persistent economic uncertainty.

The Performance Gap

Recent data dramatically illustrates this performance gap. While the Nasdaq saw periodic gains in dollar terms, with the index reaching approximately 18,000 points in early 2025, it has declined by nearly 37% when measured in gold ounces since its November 2021 peak. This gap represents a substantial loss of purchasing power for tech investors when measured against one of history's most reliable stores of value.

This performance gap underscores a fundamental shift in investor priorities. The tech-heavy Nasdaq, which dominated market returns during the pandemic era of near-zero interest rates and massive fiscal stimulus, has struggled to maintain its momentum as monetary conditions tightened and economic growth concerns mounted.

Inflation and Monetary Policy Responses

Gold's rally began in earnest when inflation started accelerating in early 2021. The Consumer Price Index showed a significant year-over-year increase of 2.62% in March 2021, with inflation eventually peaking at 9.06% in July 2022. This inflationary environment traditionally benefits gold, which many investors view as a hedge against currency devaluation and purchasing power erosion.

While the Federal Reserve responded with aggressive interest rate hikes starting in March 2022, inflation proved more persistent than initially expected. Current data shows consumers expecting inflation to hit 6% over the next year, the highest since May 2023, with long-term inflation expectations at 3.9%, the highest in 30 years. These expectations have strengthened gold's appeal as an inflation hedge.

Economic Uncertainty and Recession Fears

Historical data demonstrates gold's tendency to outperform during periods of economic stress. In six out of eight recessions between 1973 and 2020, gold outperformed the S&P 500. From six months before the start of a recession to six months after its end, gold has rallied 28% on average, outperforming the S&P 500 by approximately 37%.

Current economic indicators suggest growing pessimism. A recent Harris poll revealed that 56% of Americans believe the country is already in a recession, with a record 60% expecting business conditions to decline over the next 12 months—a figure that peaked at just 42% even during the 2008 financial crisis. This widespread economic anxiety creates an environment where gold traditionally thrives.

Geopolitical Tensions

Escalating geopolitical conflicts, particularly in Ukraine, have driven investors toward safe-haven assets like gold. These tensions have contributed to gold prices reaching all-time highs above $3,030 an ounce. Additionally, concerns about potential trade wars and tariff policies have exacerbated economic uncertainty, further supporting gold prices while pressuring growth-oriented tech stocks.

The threat of supply chain disruptions and resource nationalism has added another dimension to these concerns. As countries increasingly view critical resources as strategic assets, the potential for restricted access to essential raw materials has heightened uncertainty for technology companies dependent on global supply chains.

Interest Rate Sensitivity

Technology companies, particularly high-growth, high-valuation firms, are especially sensitive to interest rate increases. Higher rates reduce the present value of future earnings, disproportionately affecting growth stocks whose valuations depend heavily on projected future cash flows. The Federal Reserve's aggressive rate hiking cycle that began in March 2022 created a challenging environment for tech stocks, coinciding with gold's upward trajectory.

This interest rate sensitivity explains why tech stocks performed exceptionally well during the extended period of near-zero interest rates but struggled as monetary policy normalized. Gold, meanwhile, initially declined when rate hikes began but found support as markets began anticipating eventual rate cuts to combat a potential recession.

Valuation Concerns and Market Concentration

The technology sector, particularly the "Magnificent Seven" stocks, experienced extraordinary valuation expansion during the pandemic era. This concentration of market performance in a handful of stocks created vulnerability once market conditions changed. Recent data shows these dominant tech stocks underperforming the broader market, marking their poorest quarterly performance in over two years.

Apple, for instance, has faced significant challenges, with its stock dropping approximately 18% since reaching a record closing price of $259 on December 26, resulting in a market capitalization decrease of over $700 billion. Tesla has lost nearly 36% in the past month alone amid rising EV competition. These dramatic movements highlight how quickly valuations can contract when market sentiment shifts.

Sector-Specific Challenges

Beyond macroeconomic factors, technology companies face industry-specific challenges that have dampened investor enthusiasm. Nvidia shares fell during its annual GTC event despite announcements about new AI chips and partnerships with General Motors. Tesla continues to face pressure from competitors like Chinese EV maker BYD, prompting analysts to lower price targets due to concerns about self-driving technology and market penetration.

Other challenges include:

• Market Saturation: Many core tech markets are approaching saturation, with smartphone and PC sales plateauing globally.
• Regulatory Scrutiny: Increased regulatory pressure across global markets threatens to limit growth and increase compliance costs.
• AI Investment Costs: The massive capital expenditures required for AI development strain balance sheets with uncertain return timelines.
• Talent Competition: Rising costs for technical talent in a tight labor market compress margins for tech companies.

These sector-specific issues, combined with broader economic concerns, have contributed to the tech-heavy Nasdaq entering correction territory, with the index down more than 10% from its last peak.

Diversification Benefits

While technology stocks and gold have historically offered diversification benefits, their correlation increased during periods of extremely low interest rates. As monetary conditions normalized and economic uncertainty rose, gold's performance has diverged from tech stocks, restoring its diversification value.

Investors should consider DataTrek Research co-founder Jessica Rabe's recommendation that portfolios include both US large-cap growth stocks and gold. The former reflects human innovation, which tends to outperform over the long run, while gold serves as a hedge against periods when investors question that innovation's sustainability and seek safety.

Reassessing Risk Profiles

The Nasdaq's "gold recession" since 2021 reminds investors to regularly reassess their portfolio's risk profile. The extremely strong performance of technology stocks during the pandemic created significant portfolio concentration for many investors, potentially reducing diversification and increasing vulnerability to sector-specific downturns.

"One of the keys to successful investing long term is to not have all of one's eggs in one basket—investors in those high-flying sectors should be thinking about that basket right about now."

This advice seems particularly prescient given recent market developments. Investors who maintained some allocation to gold have been rewarded with a store of value that has appreciated significantly while providing portfolio stability during tech volatility.

Contrarian Indicators

Gold's outperformance relative to tech stocks provides a contrarian indicator that investors should consider. When measured in gold terms, Nasdaq's underperformance signals a fundamental shift in market sentiment that may precede broader economic changes.

Historically, gold has performed well during periods of stagflation and economic uncertainty, particularly when the Federal Reserve and federal government respond with stimulus measures. If current conditions persist or worsen, this pattern suggests continued strength for gold relative to technology stocks.

At the same time, extreme divergences between tech stocks and gold historically tend to mean-revert over time. While timing such reversals is challenging, investors should be aware that periods of maximum pessimism often create opportunities in oversold sectors.