In This Article:
The high-flying 'Magnificent Seven' mega-cap tech stocks that powered markets in 2023 seem poised to extend their leadership in 2024. According to FactSet data, six of the seven including Microsoft (MSFT) and Nvidia (NVDA) are projected to rise double-digits this year, with only a negative return seen for Tesla (TSLA).
Yahoo Finance's Josh Lipton and Julie Hyman break down the details.
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Video Transcript
JOSH LIPTON: So let's stick with the Magnificent Seven here because we know they drove record market gains in 2023. And Wall Street, optimistic the tech giants can keep that momentum going in the new year. According to estimates compiled by FactSet, the Street is projecting the Magnificent Seven stocks will rise an average of 11% in the new year, with the exception of laggard Tesla.
So as you mentioned, Julia, this is sort of that time of year, you rethink your portfolio maybe a bit. You think you know what, do I stick with the winners, right? And certainly the Magnificent Seven winners in 2023. If you piled in 12 months ago, you're probably feeling pretty good and pretty smart right about now. And there were different reasons those stocks worked last year.
You could think about AI, certainly these were companies that put so much time and effort and money into that tech, and they began to integrate that tech across their product portfolios.
Another reason obviously, some investors piled in because they thought they were defensive, right? They saw they were relatively predictable strong moats, strong balance sheets. Warren Buffett likes some of them. He's a pretty smart guy. So now the question is, do you think do you stick with that trade as we head into the new year?
JULIE HYMAN: Well, most strategists are sticking with that trade, at least the individual analysts who cover these stocks, if we look at those price targets, except for Tesla, they're all on average looking for upside here. That said, they're all expecting less upside than we saw last year without exception. All of those Magnificent Seven stocks, if you calculate the change from the close on Friday, last Friday, to the price target, we're talking about a smaller gain than they saw in 2023, or in Tesla's case, a loss.
So it is optimism, but it's more muted optimism going into this year. One of the folks who's a macro person, who looks at this is David Costner over at Goldman Sachs. He says the baseline is that mega-cap tech stocks will continue to outperform the remainder of the S&P 500, although it should be said, the forecast for the S&P overall, there's a big range, but most of them are also for modest gains in the index.