🚀 AI-picked stocks soar in May. PRFT is +55%—in just 16 days! Don’t miss June’s top picks.Unlock full list

Analysts are less bullish on Magnificent 7, Big Tech as rally loses steam

Published 22/04/2024, 14:12
© Reuters.

From January 2023 to April 2024, the stocks of the “Big 6 TECH+” companies – Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN), Google (NASDAQ:GOOGL), Meta (NASDAQ:META), Microsoft (NASDAQ:MSFT), and Nvidia (NASDAQ:NVDA) – surged by 117%. This group comprises all of Magnificent Seven stocks, excluding Tesla (NASDAQ:TSLA).

However, these stocks have recently experienced a combined decline of 8%. According to UBS strategists, each of these companies, including Tesla, has retreated from recent highs, most notably the electric vehicle (EV) marker and Nvidia, with pullbacks of 50% and 20%, respectively.

UBS is less bullish on Big 6

In turn, UBS downgraded Big 6 companies from Overweight to Neutral, citing “earnings momentum reversal.”

“Investors attribute the run in mega cap stocks to animal spirits and the impact of AI; however, our work indicates that surging earnings momentum fueled this upside,” strategists led by Jonathan Golub noted.

“Unfortunately, this momentum is collapsing, with Big 6 EPS growth expected to decline from 42% to 16% over the next year, while the rest of TECH+ and non-TECH+ stocks accelerate,” they added.

UBS said their downward revision was not due to concerns over extended valuations or doubts about AI technology. Instead, it reflects a recognition of the challenging comparables and cyclical forces that are currently affecting these stocks.

“These forces do not apply to other TECH+ companies or the rest of the market in the same way,” strategists explained.

Elsewhere, Citi strategists have conducted simulations to understand the performance of equity markets without the contribution of key stock groups – the Magnificent 7 in the U.S. and the Super-7 in Europe.

The findings indicated that, over the past five years, both markets would have performed differently if these groups had been excluded. Specifically, the hypothetical benchmarks showed that the U.S. market would have lagged by 14%, and the European market by 7%.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.