CMV: Big Tech stocks aren’t in a bubble, Big Oil stocks are.

Contrarian Call: The real bubble is not in Tech but in Oil stocks. Sounds absolutely outrageous I know but the numbers are the numbers so here it is.

XOM

2026 PE: 21

5y PEG: 1.92

META

2026 PE: 22

5y PEG: 1.2

Chevron

2026 PE: 26.3

5y PEG: 3.5

MSFT:

2026 PE: 22.9

5y PEG: 1.5855

Now let’s look at annual earnings. Chevron and Exonn both have seen a decline in annual earnings since 2022 oil peak. For Exonn annual earnings have almost HALVED while the stock price has gone UP.

https://www.macrotrends.net/stocks/charts/XOM/exxon/eps-earnings-per-share-diluted

Contrary to this, both META and MSFT have increased their earnings and revenue by 40%+ since 2022.

https://www.macrotrends.net/stocks/charts/META/meta-platforms/eps-earnings-per-share-diluted

Even if we assume that oil prices go up and energy companies deserve a higher premium multiple. Both Exonn and Chevron are trading at historically high PEs excluding recessionary or negative earning periods.

https://www.macrotrends.net/stocks/charts/CVX/chevron/pe-ratio

https://www.macrotrends.net/stocks/charts/XOM/exxon/pe-ratio

Lastly, even if we assume that Oil is a more reliable business and you will make better returns over long term with dividends, fact is MSFT returned 1000+% while XOM returned 700+% since the year 2000. Including dividends.

Earnings predictability: now this is subjective, I would argue that global oil and gas usage will go down over time not just because of climate concerns but simply because global population growth is slowing. Barring Africa and parts of Asia almost every country in the world including India and China have less than 2.1 TFR rate. If we count in the fact that developing countries are not using oil as much as today’s developed countries did during their development the effect is even more profound. Pakistan for instance with a per capita much lower than US now has a widespread solar adoption because oil energy is more expensive than solar energy.

Also, I won’t even talk about all the new supply coming online pushing the oil prices lower from guayana and potentially from Venezuela, Iran and Russia. That’s too unpredictable.