Already a subscriber?The year-long rally in the so-call Magnificent Seven – Apple, Microsoft, Alphabet, Nvidia Amazon, Meta and Tesla – has lost ground for a second straight session, adding to calls that risks simmering beneath the mega-cap surge may be starting to surface.led by Facebook-owner Meta which slumped more than 4 per cent after former president Donald Trump reversed his call to ban TikTok, and said doing so would help Facebook, which he called “an enemy of the people”.
Rallying almost 300 per cent in 12 months, the stock has helped fuel a 35 per cent surge in the S&P 500, which has also been boosted by similar gains in other so-called magnificent seven stocks – Apple, Microsoft, Alphabet, Amazon, Meta Platforms and Tesla.Ellerston Capital stock picker Chris Kourtis said his fund had struggled to keep pace with the market, adding that a lot of local tech stocks had simply rallied “in sympathy” with the US counterparts.
Flagging potential headwinds facing the sector, Mr Conlon said profit growth expectations for the US mega-caps were becoming less tenable.“There is a big presumption that the profit growth of these big technology companies is going to keep on growing and be durable forever,” he said. “But for now, we’re not seeing bubble conditions. It’s just a stretched market primed for a pull-back.”Mr Conlon noted that signs of increasing global regulation targeting several of the magnificent seven could also prove a headwind to the sky-high earnings expectations.
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