15 years of technology bullies “defected”! Wall Street veterans shout: It's time to cut back on the “Big Seven”

The Zhitong Finance App learned that as the dominant position of the US “Big Seven” in profit growth may weaken, Ed Yardeni, senior Wall Street strategist and founder of Yardeni Research, advised investors to reduce the share of these seven tech giants in the S&P 500 portfolio.

According to Yardeni analysis, these super-large stocks, which have dominated the recent market rebound, are facing increasing competitive pressure.

“We are seeing more and more competitors covet the big profit margins of the 'Big Seven, '” Yardeni wrote in the report, adding that technological advancements are instead expected to improve the productivity and profitability of the broader US business community. In his view, “every company is transforming into a technology company.”

Based on this judgment, Yardeni said that in the S&P 500 portfolio, the practice of continuously recommending overfitting the IT and Communications Services sector since 2010 is no longer reasonable.

In a research report released last Sunday, Yardeni Research pointed out that it is currently more inclined to adopt a standard strategy for the above two sectors, and the capital will instead increase exposure to the financial and industrial sectors, while at the same time overmatching the healthcare sector.

When this investment proposal was made, the “Big Seven” had already experienced extraordinary performance for several years. This group includes companies such as NVDA.US (NVDA.US), Meta Platforms (META.US), and Google (GOOGL.US). Driven by the artificial intelligence boom during and after the pandemic, investors poured into large technology stocks, causing this group's commonly used tracking index to soar by more than 600% since the end of 2019, far exceeding the increase of about 113% in the S&P 500 index.

In addition to the US stock market, Yardeni also questioned the rationality of maintaining overbalanced US assets in the global MSCI index portfolio. He pointed out that the international market performed relatively well this year, thanks to more attractive valuation levels, the weakening US dollar, and the resilience of profits of companies outside the US.