2 months ago
Mag 7 Have Lost Over a Trillion in Market Value. They're Still the Best Trade.
Stocks of high-flying big tech companies have lost more than a trillion in market value. They're still the best trade for 2024 by far.
The Magnificent 7 Stocks—Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta Platforms, and Tesla—have collectively lost $1.182 trillion in market cap over the last five trading days. It’s the largest five-day loss for this group in about two years, according to Dow Jones Market Data.
Market strategists have called this a rotation out of technology stocks into the broader market. But there’s no real evidence the rotation is sustainable.
Pressure on the sector Wednesday stems from worries about tighter regulation on tech companies and a tense relationship with China. There are also concerns the dizzying artificial intelligence rally has gone too far, and that it's time to give the beaten up sectors—such as small caps—a shot.
And while it’s valid to question tech’s dominance, there has been no sea shift in fundamentals of the tech companies in the past week. Tech has rallied on AI promise—although earnings now carry more weight. Any negative commentary on AI expenditure or usage can hit stocks.
“We would need to see more evidence of a sell-off in ‘big tech’ to be convinced” that a rotation is “well and truly underway,” said John Higgins, chief market economist at Capital Daily.
First results from the Mag 7—Tesla—hit the tape on July 23.
Despite the questions on rotation, the Mag 7 is still up 33% for the year, a better showing than most key indexes. It was up 42% as of last week Wednesday’s close.
