Tech Giants Diverge as Scrutiny Rises on Valuations
-
The "Magnificent Seven" tech stocks diverged in October performance as earnings affected valuations. Amazon and Microsoft rose, while Alphabet, Nvidia, and Tesla fell.
-
Scrutiny has increased on tech valuations and AI promises amid a shifting market backdrop. Investors are debating if the Magnificent Seven are overvalued.
-
The Seven still account for 30% of the S&P 500, so their performance greatly impacts the index. Their declines have contributed to the S&P 500 dropping since summer highs.
-
Signs of market rally broadening beyond the Seven remain lacking. Areas like small caps and financials continue to lag despite some better earnings.
-
As the Seven's tide recedes, it reveals which sectors lack support. The question becomes which can regroup after riding the rally without firm fundamentals.