May 17, 1995, a Wednesday, was a historic day for energy stocks. Not that they acted that way: Like the oil price — about $20 a barrel — they were flat. The action was elsewhere: Technology stocks overtook the energy sector’s weighting in the S&P 500 for the first time that day. Bloomberg News noted the Nasdaq’s rise versus the Dow’s drop, sparked by a big earnings beat from chip-equipment maker Applied Materials Inc. Netscape Communications Corp.’s stock-market debut, the internet’s coming-out party, was only a month away.

History; it rhymes. Today, a wave of enthusiasm for the next revolution, artificial intelligence, has turned the S&P 500 into S&P 5,000. Semiconductor superpower Nvidia Corp.’s market value alone is now bigger than the entire energy sector.

After 1996, tech never fell behind energy again.

Narratives of the information age supplanting the industrial one write themselves, but the details matter. Energy stocks fell from grace even as the US reemerged as the world’s biggest oil and gas producer and global oil demand topped 100 million barrels a day. This seeming incongruity stems largely from the excesses of the shale boom. In response, the industry spent the past several years proving it can prioritize dividends and buybacks. Last year’s payout set a new record.

What has the best part of half a trillion dollars bought Big Oil?1 Tolerance, but not love. There are one or two standouts, notably ConocoPhillips which, since the end of 2018, has actually beaten the S&P 500. Overall, though, these stocks now trade on markedly lower multiples than before the pandemic.

Paul Sankey, a veteran Wall Street analyst who now runs Sankey Research LLC, tracks the energy sector’s share of forecast S&P 500 earnings alongside its weight in the index. At the end of 2019, both were aligned at roughly 4% each. Today, energy’s share of earnings has jumped to more like 7% — but its weight in the index is below 4%.

The last time we saw a gap like that was in the run-up to 2014, which made sense. Oil was over $100 a barrel and bound to fall, taking earnings with it. Plus, the companies were overspending. Today, oil at around $80 doesn’t seem overstretched and the industry is giving out, not gobbling, capital.

Perhaps investors, seeing peak oil (or gas) demand hasn’t arrived just yet, think the majors should actually be reinvesting a bit more now that they’ve shown contrition. Well-timed deals, especially Conoco’s mid-pandemic swoop on Concho Resources Inc., have been well-received, as was Diamondback Energy Inc.’s $26 billion acquisition of Endeavor Energy Resources LP on Monday.

Yet scars from the last spending boom remain. Exxon Mobil Corp.’s higher-than-expected capital expenditure figure for the fourth quarter overshadowed strong results recently. Diamondback, meanwhile, twinned its big deal with a 7% dividend increase and a pro-forma cut to combined capex budgets of roughly 10%-20%.

Rather than investors falling in love with drilling again, this combination of big buybacks and flat multiples resembles a form of well-paid apathy. The boom in mergers and acquisitions is more like overdue rationalization of an industry with too many c-suites than some bullish scramble for assets.

As the mantra of discipline has morphed into dogma, bullish catalysts remain elusive.

Saudi Arabia-led supply cuts have supported oil prices but by definition create an overhang of spare capacity waiting to cap rallies. The oil and gas markets have also seemingly digested the initial shock of Russia’s invasion of Ukraine and appear untroubled by rising violence in the Middle East. US natural gas prices have resumed their habitual torpor, even as the White House casts doubt on future exports. In the background, while the energy-transition mood music has become somewhat subdued of late, investments in cleantech are still surging, policy remains supportive and even if Tesla Inc. looks less magnificent these days, China’s booming electric vehicle sales are impossible to ignore.

Above all, the Magnificent Seven growth stocks have sucked all the oxygen out of the room. Not only does the tech sector offer growth, it now, in contrast to the bubble of the late 1990s, offers big payouts of its own. When Meta Platforms Inc. recently unveiled a $50 billion buyback and new dividend, the stock’s one-day gain of $197 billion, the biggest ever, was worth more than Conoco’s and Occidental Petroleum Corp.’s market caps combined. At 30% of the S&P 500’s market cap — but only about 20% of the anticipated earnings — the tech sector’s weight is now roughly eight times that of energy, an even wider gap than at the height of the tech bubble 24 years ago.

Just as war jolted energy stocks two years ago, so they may need another exogenous shock to break out of limbo — namely, another tech crash. The timing of that is impossible to call; AI is so amorphous and potentially revolutionary that betting against it, or even just specific companies, is not for the faint-hearted.

As much as having one’s fate determined by outside forces grates, the energy sector may simply have to accept its status as a hedge against that day coming (as well as any more wars that crop up). Sankey points out a certain irony here in that the data centers behind AI are energy hogs, spurring big increases in forecasts of US electricity consumption (see Sankey’s video as well as this Bloomberg News story). Their demand for always-on power could offer some respite for the gas market, at least — or present obstacles to development that disrupt tech’s rally. Sankey sums up: “You can’t be long AI and short energy, sustainably, but the market is anyway.” The energy sector, busily consolidating itself for when sentiment turns, is left to hurry up and wait.