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Now time for some of today's trending tickers. We're checking in on the mag 7 rally as well as Vertiv Holdings following their earnings and one analyst note that has Enphase energy sinking. We'll let's start with Big Tech stock surging for a second day. Tesla and Amazon leading the Magnificent Seven stocks higher as the Trump Administration hints at this de-escalation of the US China trade war. Nothing concrete happening, but the stocks are moving. And Dave, you're a perfect person to talk about this. You are at a firm that has a mag 7 ETF that is very closely followed. I was just looking at the latest stats, it's down about 20% year to date. We all know what's been going on with the mag 7. So a little bit of a pop today, um but you said earlier that this is a bear market rally. And I assume that goes for the mag 72.

Yeah, no, absolutely right. I think you can't really disentangle the Magnificent Seven from the market anymore, right? Because of the concentration that we've been talking about now sort of for years, right? We saw the benefits of that last year and now the downside is coming into play in a selloff. But what's interesting is that these names, of course, which were the leaders in revenue growth and earnings growth, and actually this quarter they're still forecasted to be the same. Maybe Tesla aside, we'll see what Alphabet brings us tomorrow, but they're driven on sentiment, right? They were sort of the first sort of to be sold off before we even got the meat and heart of the selloff. And in fact, some are saying, um, that they could be the first to lead us out of it, just because simply they are at the kind of tip of the spear, especially because of sort of their seven stocks, but there are hundreds of companies under the hood and they're kind of a tangled web of companies whether it's on the pure tech side or on the consumer side.

Yeah, and of course, then they have all the other companies that rely upon them as well that go that are are below. I mean, you know, we are seeing Tesla, of course, rally on its earnings, although it's as we talked about, it's probably more on Elon Musk's comments. But I do wonder how much upside some of the other mag 7 participants are are could potentially get from earnings with the macro clouds hanging over them.

Well, it's interesting. We haven't talked about valuation yet today. And right, and so these names, of course, were it's hard to say that they weren't expensive last year. There was a lot of justification, perhaps even by myself, that they were trading at those levels because they were the only companies making money. Um to to be frank, if you excluded them from the S&P 500 and looked at the earnings there, it wasn't great. Um but they were, and so they were that valuation was almost justified. Now the the valuations come in significantly. It's trading closer to its five-year average relative to the market. However, the challenges, well, are those earnings forecasts going to be anywhere close to fruition? I think those estimates have to severely come down. We heard it from Drew a moment ago that this kind of Q1 and maybe even part of Q2 is almost going to be meaningless, um because how can a company give you guidance when they don't know what things are going to cost?

Well, but and the valuations discussion gets to the very crux of what we've been watching the mag 7, what we've been watching the market, which is when is the outlook priced in? Of course, the current moment's problem is you don't know what the outlook is because you don't know what each day will bring. But we're closer to pricing it in than not.

Yeah. No, I think I think that's a fair, a fair comment to to put it. Um we certainly could see multiples continue to come down if we get to some of these worst case scenarios. Um from from my perspective, I think a lot of those worst case scenarios probably should come off the table. But what is the number going to be, right? A 50 or 65% tariff is a lot more than it is currently and you have and you have to start modeling and pricing that in. Um and that's a real really challenging thing to do.

Yeah, exactly. Well, when we talk about the network below the mag 7, one of those companies is actually Vertiv. Its shares of that company are higher today after it posted strong first quarter earnings, raised its full year sales guidance. It makes cooling equipment for data centers. That's why it's in that network. Raised its 2025 net sales guidance by $250 million at the midpoint, citing robust momentum and strong AI demand. And this sort of obviously this is about Ver specifically, but more broadly, there have been some questions about the um stability of the spending plans on the part of the data center operators, the hyperscalers, etc. So for those who are worried about this, maybe this is a little bit of an encouraging sign.

Yeah, now I just said a moment ago, sort of Q1, maybe throw it away. However, these numbers are encouraging because the demand still seems to be there. Now there's a lot of question marks about what's really going to happen on the data center side. But for the time being, we have not heard any material reports from the companies themselves, whether it's Microsoft or others, that they're actually going to pull back. I think there is broadly still a belief that this AI story, and we're already kind of starting to see it in its utility, come to bear. So they're going to to be investing there. And a company like Vertiv has been a huge beneficiary of that. Um now, can it continue to grow at the pace it has been and will investors keep rewarding it? Hard to say, but if they were able to put up these numbers in what has been a questionable environment, I think it's a positive for the space.

Yeah. Um let's talk about a couple of stocks that are going in the opposite direction. Solar stocks, solar equipment stocks specifically getting hit hard after Guggenheim cut its outlook on Enphase Energy and Solar Edge Technologies to sell, flagging worsening fundamentals following Enphase's first quarter earnings report. And in that our first quarter earnings report, the company talked about margins or Enphase, that is, talked about a 6 to 8% um decrease in its gross margins in the third quarter because of tariffs here. Um and then if you look at the commentary from Guggenheim, they they had just upgraded the stock to neutral not long ago and they said, well, never mind. This report was worse than we expected here. And basically, they don't think that Enphase has sort of um been accurate or have foreseen the environment accurately. And so that's also one of the reasons that behind the downgrade.

Yeah, I know. So it's kind of been a tough spot. There's been fits and starts of it being sort of a market darling, and then of course now we're kind of seeing the negative side of that. Um Enphase is one of the worst performance in the S&P 500. Uh and I and I think the challenges is that yeah, the tariffs, particularly in a company like that, are going to play a material impact. And so investors are kind of uh shooting first and asking questions later about questionable names. And I think uh Enphase and other solar names are are are really emblematic of that trend.