A growing number of Wall Street strategists are downplaying concerns about a bubble in U.S. tech giants.
The JPMorgan Chase team finds that the seven tech giants that have driven Wall Street's record rally are now valued at lower valuations than the five-year average relative to the rest of the S&P 500. This is the latest report. .
“While we are concerned about Magnificent 7's very strong outperformance, we note that the group is currently not as stagnant as it was a few years ago, given its revenue performance,” strategist Mislav Matejka said in a note. ” he said. “This is not to say that this group is immune to future earnings disappointments, but even if overall earnings are disappointing, these stocks will still outperform traditional cyclical stocks depending on the strength of the economy,” he said. There is a possibility that it will hold up.”
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Goldman Sachs Group strategists also said last week that while the U.S. stock market is more concentrated than at any time in decades, valuations for top stocks are still much lower than for the big names at the height of the tech bubble. Ta.
The Magnificent Seven stocks (consisting of Apple, Google's parent company Alphabet, Amazon.com, Facebook-owned Meta Platforms, Microsoft, Nvidia and Tesla) led the S&P 500's biggest rally last year. Ta. Although the benchmark index hit a new all-time high in 2024, the performance of these mega-cap stocks has diverged recently.
While popular AI company Nvidia has soared to record highs, Apple's stock entered a technical correction this month on concerns about the company's weak iPhone sales and regulatory pressure.
A memo from Bank of America last week revealed that technology funds suffered their biggest outflows on record. Still, strategist Michael Hartnett reiterated that tech stocks may have further upside.
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