It’s been a summer of discontent for the momentum trade, which has mostly been hot artificial-intelligence-themed stocks that investors chased higher and could not get enough of, until they did.

Our call of the day from Goldman Sachs strategists, led by Peter Oppenheimer, says the beatdown for those hot stocks has likely created an opportunity for investors.

Oppenheimer and his colleagues firstly point to the derating seen by dominant technology companies, whose lower price-to-earnings ratios have been driven by anxiety over the returns that capital expenditure might yield in the future. Their chart shows the biggest five stocks in the U.S. now have a price-to-earnings ratio that’s just marginally higher than the other 495 stocks, eliminating the premium they have consistently enjoyed since 2017.

“It also marks a very big change from the dot-com era. Back then, valuations reached a much greater high, but they came down as stock prices collapsed,” said Oppenheimer and his team. “This time, prices have adjusted more modestly, but earnings have remained exceptionally strong.”

That sector’s P/E premium on a global basis has dropped to 20% from nearly 200% at the start of the century. That’s as tech leadership has been taken over by hardware — chip stocks, mostly — that have seen earnings growth driven by huge AI demand.

“Nonetheless, the cyclicality of these businesses — and the risk that their earnings are not sustainable — has driven them to derate too,” they noted. And while valuations for those chip names have moderated, implied future growth keeps rising and remains well below dot-com peaks.

The strategists also pointed out that investor rotation into other sectors has lifted growth prospects and valuations of many “old economy” industries, long shoved aside by investors. Industrials now have the highest sector valuation, above their 20-year range, while technology is now down to being in line with its 20-year average. In fact, consumer staples, discretionary and healthcare are all more highly valued than information technology or communication services, they said.

“The hit to the biggest stocks and the largest sector in the U.S. (despite strong earnings) has led to a lower P/E ratio, despite the U.S. remaining by far the most attractive from an ROE [return on equity] perspective,” they said. Only China has a return on equity below its historical average, but with much lower profitability and returns.

“This lower rating gives investors an opportunity to re-engage with the U.S. equity market while being selectively diversified across regions,” said Goldman.

A separate note from a team led by Goldman’s chief U.S. equity strategist Ben Snider indicated that for investors in momentum stocks, history is also on their side. “The sharpest momentum rallies in recent decades have usually been followed by periods of consolidation similar to the recent drawdown,” he wrote in a note on Friday, providing this chart:

Both “the historical pattern and the sharp deleveraging that has recently taken place among hedge funds and ETF investors suggest rotational volatility should diminish in coming weeks,” the strategists said.