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To compare technology stocks with the broader market, define each index, then measure both over the same dates, in the same currency, and using the same return convention. Put returns alongside volatility, maximum drawdown and concentration: a sector can outperform over one window while exposing investors to larger swings or a handful of dominant companies. Historical comparisons describe their chosen period; they do not predict what comes next.
Choose what “technology” and “the market” mean
There is no single universal technology-stock index. Index providers use specific eligibility rules and classifications, so indexes bearing a technology label can contain different companies. For example, the MSCI USA Information Technology Index is designed to represent large- and mid-cap U.S. equities classified in the information technology sector under GICS.
For a U.S. large-cap illustration, one option is to compare the GICS information technology constituents of the S&P 500 with the S&P 500 itself. S&P Dow Jones Indices says the S&P 500 includes 500 leading companies and covers approximately 80% of available U.S. market capitalization; it calls the index “widely regarded as the best single gauge of large-cap U.S. equities.” That makes it a large-cap U.S. proxy, not a measure of every U.S. stock or the global market. See S&P Dow Jones Indices’ S&P 500 description.
Keep the scope consistent with the question. Comparing a U.S. technology index with a global benchmark answers a different question from comparing it with U.S. large caps. Also avoid treating the Nasdaq-100 Technology Sector Index, MSCI USA Information Technology Index and S&P 500 Information Technology sector as interchangeable.
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Make the return comparison apples to apples
Before calculating performance, set four parameters for both indexes: start and end dates, currency, return series, and annualization method. Use either price return or total return for both. Total return accounts for reinvested distributions; a price-only series does not. Mixing them can make the comparison misleading.
- Match the dates: Both series must cover the same start and end points.
- Match the currency: A currency conversion can affect results, so state the currency used.
- Match the return basis: Label each series as price return or total return.
- State the annualization method: Give the exact period and method for annualized figures.
For a cumulative-return chart, rebase both indexes to the same starting value. A June 2026 Goldman Sachs supplement filed with the SEC illustrates this by rebasing three index series to 100.00 on January 4, 2021, and defines annualized return as the geometric average of percentage changes over the period. The filing also cautions that historical performance is not an indication of future performance. Read the SEC-filed supplement.
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What a dated return comparison can—and cannot—show
The same Goldman Sachs & Co. LLC supplement, filed in June 2026, reports annualized returns for periods ending June 1, 2026. The figures below use the filing’s stated annualized-return measure; they are not forecasts.
| Index | 1 year | 3 years | 5 years | Since January 4, 2021 |
|---|---|---|---|---|
| S&P 500 Index | 28.56% | 21.66% | 12.58% | 14.24% |
| Nasdaq-100 Index | 42.98% | 28.32% | 17.45% | 17.62% |
| Nasdaq-100 Technology Sector Index | 69.88% | 32.46% | 17.48% | 17.64% |
These results vary by window: the technology-sector index’s reported one-year return was notably higher than its five-year figure. The Nasdaq-100 Technology Sector Index is a particular index, not a stand-in for every technology stock. The filing says its historical chart levels were obtained from Bloomberg Financial Services without independent verification and warns that past performance does not indicate future results.
Compare risk beyond volatility
Volatility measures how much returns fluctuate, but it does not capture every investor-relevant risk. A fuller comparison should report annualized standard deviation over matching periods, maximum drawdown and its dates, and the index’s largest constituent weights. A Sharpe ratio can add context about return relative to volatility, provided the period, return basis and risk-free-rate convention are disclosed.
Volatility and Sharpe ratio
MSCI’s factsheet reports the following annualized standard deviations and Sharpe ratios for its USA Information Technology Index and MSCI ACWI IMI as of September 30, 2026:
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| Measure | Index | 3 years | 5 years | 10 years |
|---|---|---|---|---|
| Annualized standard deviation | MSCI USA Information Technology Index | 21.33% | 23.34% | 20.81% |
| Annualized standard deviation | MSCI ACWI IMI | 12.22% | 15.06% | 14.97% |
| Sharpe ratio | MSCI USA Information Technology Index | 1.36 | 0.81 | 1.06 |
| Sharpe ratio | MSCI ACWI IMI | 1.28 | 0.53 | 0.67 |
These figures show higher reported volatility for the technology index in each listed period, but they are specific to MSCI’s indexes and its September 30, 2026 data. MSCI ACWI IMI is a global comparison, not the U.S. large-cap benchmark used in the earlier example. Do not combine statistics from differently defined benchmarks as if they formed one matched test. Source: MSCI USA Information Technology Index factsheet.
Maximum drawdown
Maximum drawdown measures the largest peak-to-trough fall within a period. MSCI lists a maximum drawdown of 81.10% for its USA Information Technology Index from March 31, 2000, to October 9, 2002, and 58.59% for MSCI ACWI IMI from October 31, 2007, to March 9, 2009. These are the indexes’ reported maximum drawdowns from different market episodes, not losses measured during the same event. Always include the dates when using drawdown figures.
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Check whether a few companies dominate the sector index
A capitalization-weighted index gives larger companies greater influence, so its performance may reflect a small number of very large constituents. As of September 30, 2026, MSCI listed NVIDIA at 20.16%, Apple at 18.78% and Microsoft at 13.89% of its USA Information Technology Index. Together, those three positions made up a substantial share of that specific index on that date; weights change over time.
To see how much weighting method matters, compare a capitalization-weighted sector index with an equal-weight version. S&P’s S&P 500 Equal Weight Information Technology Index assigns equal weights to S&P 500 companies classified in the GICS information technology sector. Equal weighting reduces the largest companies’ influence and gives smaller constituents more weight than in a capitalization-weighted version. It therefore answers a related but different question about sector performance.
A practical comparison checklist
- Define the universe: Name each index and explain its sector classification and geographic scope.
- Select a suitable broad benchmark: Use a U.S. large-cap, total U.S. market or global index according to the question, and label it precisely.
- Align the measurement: Use identical dates, currency, price-or-total-return basis and annualization method.
- Report return and risk together: Include cumulative or annualized return, annualized standard deviation, maximum drawdown with dates, and concentration in the largest holdings.
- Check weighting sensitivity: If a few companies dominate, compare capitalization weighting with equal weighting where a comparable index is available.
- Date every statistic: Index composition and measured results change; state the source and data date next to the figures.
A comparison built this way can answer whether a defined technology index outperformed a defined benchmark over a particular historical window and what risks accompanied that result. It cannot establish that technology will outperform—or be riskier—in a future period.
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