Rethinking the "Mag 7"

RETHINKING THE "MAG 7"

After 18 months of tech euphoria, the latest reporting season on Wall Street has highlighted diverging market and earnings trends around the so-called "Magnificent 7" group of stocks, with Tesla TSLA in particular being left behind.

This increasing dispersion is leading investors to rethink the group, made up of Apple AAPL, Microsoft MSFT, Google parent Alphabet GOOG, Amazon AMZN, Nvidia NVDA, Meta Platforms META and Tesla TSLA.

"We have started to see some differentiation with Nvidia continuing to exceed expectations... and Tesla and Meta increasing their volatility around news and results," says Chiara Robba, head of LDI Equity at Generali Asset Management.

"At the beginning of the year, a price correction in Apple (due to China I-Phone sales softening), Tesla (some price war concern on the EV) and Meta (higher capex) made some investors rethink of the number of the magnificent seven, with a possible reduction down to four/five," she adds in a note.

"I think that the Magnificent 7 will continue outperform... but with a possible three-speed: Nvidia continuing to be on the podium, a big chunk of companies in the middle, and Tesla possibly lagging behind," she concludes.

(Danilo Masoni)

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