3 New Reasons to Worry about the Magnificent 7 Stocks
With seven huge deals that are often made in less than two months this year, investors may need to rethink their position before making a sale.
“Over the past few years, we have maintained the view that long-term only U.S. stock managers are cautious about at least market weight 7. Today, our view has evolved to the point where we are changing our minds and think reducing contact is cautious. .
A huge seven trades from META (META), Amazon (AMZN), Google (GOOG), Apple (AAPL), NVIDIA (NVDA), Microsoft (MSFT) and Tesla (TSLA). Only one large technology component (Meta) has released double-digit gains, which is consistent with the industry’s usual outstanding performance.
Amazon is the only magnificent seven components that rose to 5.2% that year, slightly above 3.5% from the S&P 500 (^GSPC). Letters, Apple, NVIDIA, MICROSOFT and TESLA have all declined to date, with an average drop of 3% according to Yahoo Finance. Tesla is the worst performer, down 17% this year.
The reasons for the sold out range from weak sales (Tesla) to rising fears as tech companies spend too much to build AI infrastructure (the remaining seven).
Parker, a senior market expert, believes that now is a good time for investors to reduce exposure for three reasons.
First, it is unlikely that the street will stop reviewing how much it spends on AI in 2025 and 2026.
Yahoo Finance’s Laura Bratton reported that Meta, Microsoft, Amazon and Alphabet plan to spend $325 billion in capital expenditure and investment this year. For these four technically determined people, this will mark a 46% year-on-year growth.
Amazon alone saw $100.4 billion in capital expenditure this year, far higher than previous analysts’ forecasts of $80 billion to $85 billion.
Parker notes that stocks tend to react negatively to these bold spending commitments.
“There is no doubt that high capital expenditure will continue to be under increasing scrutiny until investors can better understand the returns on large-scale investments today,” Parker said.
Despite selling a huge seven shares, Parker is also a valuation of concern.
Parker’s research shows that the relative price of forward returns is 42% compared to the rest of the S&P 500. This is the upper range of its 25-year average.