(Bloomberg) – Investor love for technology stocks has cooled noticeably this year. And while the upcoming flurry of earnings from the group provides an opportunity to revive romance, tech faces an uphill battle when it comes to mastering the kind of devotion after the demise of all other sectors in 2020, tech stocks in the S&P 500 index was pushed into the background this year and was outperformed by sectors such as financials and industrials, which have better growth prospects. Cops are betting that strong results and forecasts from companies like Apple Inc. will help bring technology back to the fore. High valuations pose a challenge, however. “If these companies are to get back to stock price growth, they must have a good history of where and when that growth will come from,” said Kim Forrest, chief investment officer at Bokeh Capital Partners. A rally in the past two weeks has pushed the tech-heavy Nasdaq 100 index to a record high this month after rising interest rates and concerns that stocks were too expensive drove the benchmark 11% lower in early March. While tech led the market again in April, a 9.9% increase for the group in the S&P 500 this year still lags seven of the eleven other major industries. As is usually the case, the tech group is expected to see strong sales and earnings growth. What is different this time around is that growth in much of the rest of the market will be even better this year, which is flattered by comparisons to the same period in 2020 when large parts of the economy closed. Tech companies are expected to lead the S&P 500, with revenue growing 16% in the first quarter, according to Bloomberg Intelligence. However, the prognoses for the rest of the year are not quite as positive. Growth of only 5.6% is expected for the fourth quarter. In terms of earnings expansion, the technology looks even less attractive, with estimates in 2021 of 22% – an impressive feat that lags behind Financials, Industrials, Consumer Discretionary and Materials. For the bears to even outperform growth, projections are insufficient to support the highest valuations in years. With earnings down 41x, the Nasdaq 100 is trading its most expensive valuation since 2004. Investors worried about valuations are underestimating the revenue growth potential for many tech companies like Microsoft Corp. and cybersecurity firm Zscaler Inc., which is about to capture even more spending from companies investing in digital services, said Daniel Ives, an analyst at Wedbush Securities Inc. “What has been lost in the noise is the massive underlying growth stories that are will take place as part of the digital transformation, ”said Ives. “It will be a dominant quarter for technology across the board.” According to Bloomberg, S & PAmazon.com Inc. is the only company in the top 5 whose revenue growth is expected to shrink this year. This is no surprise considering how much core businesses like e-commerce and web services have grown in 2020 due to US bans. Alphabet Inc., Facebook Inc., Apple and Microsoft are expected to see faster revenue growth in their current fiscal year, Amazon and Apple, the two best-performing Megacap stocks last year, outperformed the S&P 500 in 2021 . Amazon grew 4.4%, while Apple only grew 1.1%. Some of the most expensive software companies in particular have received a beating so far this year. Coupa Software Inc., an expense management software maker that has nearly 30 times its projected revenue this year, is down more than 20%. For some investors, elevated valuations are not easily ignored: “Tech stocks have historically been extremely expensive,” said Michael O’Rourke, chief market strategist at Jonestrading. “Even if the optimistic profit forecasts are met, the market would still be very expensive.” For more articles like this, visit bloomberg.com. Subscribe us now to stay up to date with the most trusted business news source. © 2021 Bloomberg L.P.