The reign of the “Magnificent Seven” stocks that have been driving the stock market rally over the past year may be coming to an end, according to UBS Investment Bank’s chief US equity strategist Jonathan Golub.
Golub downgraded six of the seven powerhouse stocks – Apple, Alphabet, Microsoft, Amazon, Meta, and Nvidia – from Overweight to Neutral in a recent research note. This downgrade comes as the Big Tech leaders just experienced their largest weekly market cap loss in history, with all seven stocks falling from their recent highs.
While Golub remains optimistic about the technology sector as a whole, he believes that the tide may be shifting away from the largest tech companies that have been driving earnings growth in the S&P 500. He attributes the recent decline in these stocks to difficult comparisons and cyclical forces that are weighing them down.
Despite the expected slowdown in earnings growth for these large tech companies, Golub remains positive about the broader market and the US economy. He predicts that the S&P 500 could reach 5,400 by the end of the year, supported by positive fundamentals and a robust economy.
As earnings season kicks off, investors will be closely watching the quarterly results from Tesla, Meta, Microsoft, and Alphabet to see how these companies are faring in the current market environment. With signs of a shifting landscape in the stock market, it will be interesting to see how these tech giants adapt to the changing conditions.