Key Points
- Stabilization in the Mag 7 “would be an important positive for the broader market,” according to Fundstrat technical strategist Mark Newton.
- Mag 7 has dominated the U.S. market with a combined valuation of around $22.62 trillion
Recent weakness in the Magnificent 7 stocks now looks to be an opportunity for investors, given that US equity trends remain bullish in the near term, said Mark Newton, head of technical strategy at Fundstrat. Within the Mag 7, Microsoft, Meta, Alphabet and Amazon have fallen roughly to two-month lows and the underperformance now looks mature, Newton said. “It’s right to start looking for relative strength to reassert rather than chasing the weakness,” he said, adding that a stabilization in the Mag 7 “would be an important positive for the broader market, with the possibility of falling crude, yields, and the US dollar.” The group dominates the U.S. market with a combined valuation of around $22.62 trillion, led by artificial intelligence chipmaker Nvidia at $5.13 trillion, according to research firm Vanda. However, questions about the sustainability of growth in AI, as well as competition from the likes of Chinese rivals are among factors that have weighed on their shares. Newton isn’t the only analyst seeing potential for a rebound in the shares. “I don’t think there will be a transfer out of [the Mag Seven],” Paul Meeks, sell-side head of tech research at Freedom Capital Markets, told CNBC in an earlier interview , adding that the key theme now will be AI infrastructure building. “Because the spending is being done by the hyperscalers, which almost to a man are the Mag Seven, I think that they’re secured. I think money might come out of other investments to invest in those IPOs,” Meeks added. Mag 7 is expected to be part of the new so-called Fab 10 — which includes SpaceX, OpenAI and Anthropic — amid surging demand for AI, with retail investors buying SpaceX in record numbers as part of their new portfolio plan, according to analysts. — CNBC’s Tobias Burns contributed to the story.
