Morgan Stanley drops surprising message on tech stocks

Morgan Stanley’s Andrew Slimmon feels large-cap tech stocks are poised for a stunning comeback. Following months of underperformance, helium feels the markets are underestimating the group’s adjacent move.

That’s a daze take, to accidental the least, arsenic the communicative astir tech has soured of late.

Recently, we’ve seen a displacement into industrials, cyclicals, and assets linked to interest-rate cuts, leaving the large guns successful tech treading water.

For perspective, according to PortfoliosLab, the Industrial Select Sector SPDR Fund (XLI) is up 2.80% implicit the past month, portion the Technology Select Sector SPDR Fund (XLK) is down 0.33%.

Though tech inactive leads connected a full-year basis, things person intelligibly been unsmooth lately.

To beryllium fair, having covered the banal marketplace for fractional a decennary oregon so, particularly the Magnificent 7, I’ve seen this movie before.

Investor sentiment tin crook quickly, and stocks that felt virtually untouchable abruptly consciousness similar yesterday’s trade.

Slimmon’s instrumentality cuts done that prevailing view.

He makes the lawsuit that ample tech is looking a batch much reasonably priced than a batch of the sectors investors person rushed into. Earnings haven’t cracked, but expectations have.

The Magnificent 7 is fundamentally Mr. Market’s nickname for 7 of the biggest mega-cap tech leaders that tin efficaciously resistance large benchmarks up oregon down astir by themselves.

A Bank of America strategist popularized the label, arsenic the radical dominated the S&P 500’s full capitalization.

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Over the years, the attraction levels person gotten extreme.

Reuters reported the Mag 7 represents roughly one-third of the S&P 500’s value and nearly 45% of the Nasdaq 100.

This prompted comments from Lisa Shalett, main concern serviceman astatine Morgan Stanley Wealth Management, Reuters reported.

• Apple (AAPL)

• Microsoft (MSFT)

• Alphabet (GOOGL) (often paired with GOOG)

• Amazon (AMZN)

• Nvidia (NVDA)

• Meta Platforms (META)

• Tesla (TSLA)

Slimmon argues that the Q4 sell-off successful Big Tech had small to bash with fundamentals breaking down.

In fact, it was mostly astir investors chasing what felt safer and much timely, arsenic rate-cut expectations took halfway stage.

Related: Major slope issues bold golden terms people for 2026

The cardinal constituent Slimmon makes is that earnings ne'er cracked.