"Mag 7" stock price continues to fluctuate, is it a good opportunity to buy on dips?
US stocks, which have been rising for several months, experienced a sharp decline in July. $S&P 500 Index (.SPX.US)$Since reaching an all-time high on July 16th, it has fallen more than 8% overall. $Nasdaq Composite Index (.IXIC.US)$The cumulative decline rate is exceeding 10%. Is the "Magnificent Seven" also entering an adjustment phase, and will the downward trend continue, or is it an opportunity to buy on the dips after a sharp drop in the stock price of "Mag7"?
According to Bloomberg data, more than half of the expected (forward) PEs of the "Mag7" 7 companies, namely $Tesla (TSLA.US)$、 $NVIDIA (NVDA.US)$、 $Amazon (AMZN.US)$、 $Alphabet-A (GOOGL.US)$have already fallen below the 5-year average. Also, $Microsoft (MSFT.US)$、 $Apple (AAPL.US)$、 $Meta Platforms (META.US)$The estimated PER has dropped close to the average value of the past 5 years.
On the 7th, Man Group, the world's largest listed hedge fund management company, stated that the evaluation of 'MAG 7' is not 'too high' and it would be relatively reasonable to achieve a justifiable return.
After last week's sell-off,The valuations of the 7 major US technology companies have returned to a reasonable level, according to Man Group's report.Man Group pointed out.
According to Man Group's analysis, the valuation of 'MAG 7' reflects the possibility of achieving a relatively low return in the mid-teens over the next 10 years. Man Group explains that Google, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla only need to grow their free cash flow at a moderate pace to justify their current valuations.
In terms of growth expectations, Microsoft has the highest expectations, and in order to achieve a return of 10% per year, free cash flow needs to grow at an annual rate of 17%. Meta has the lowest expectations, and the growth rate of free cash flow required to achieve the same 10% annual return is only 8.5%.
According to a customer report from JP Morgan's team on the 5th, individual investors are buying stocks at a sharply decelerating pace, commodity trading advisors (CTAs) engaged in trend-following investments have significantly reduced their stock positioning, and hedge funds have been selling US stocks.
According to John Schlegel, Head of Competitor Positioning Intelligence, "When you look at the overall picture,it is believed to be approaching a tactical opportunity to buy on dips,"he wrote." However, whether it will rebound strongly or not will depend on PMI, Consumer Price Index (CPI), and retail sales in the coming weeks,"he continued.""However, JP Morgan believes that the rotation from high-tech to risk assets has almost come to an end, but especially when it comes to high-tech stocks,
declaring 'no problem' is still difficult","he said.""JP Morgan sees potential'",
There are various reasons and causes for this sharp decline in the market perspective. However, the most important thing is that the stock prices are too high.
Investment analyst AJ Bell, Mr. Dan Coatsworth pointed out that the expectations for the so-called 'US Mega 7' may have been too high.
At this time last year, the US stock index updated its year-to-date highs and then turned to a correction. The resumption of the increase occurred at the end of October when the Federal Reserve Board (FRB) turned dovish.
Looking back at the last 3-month market correction, the S&P 500 index fell by 10%, and the Nasdaq Composite Index fell by 13%. If we expect based on past experiences, the extent of this correction has not yet reached the level of the previous one.
The US presidential election, FRB policy interest rates, Nvidia earnings reports, etc..
Harris and Trump, the candidates in the U.S. presidential election, have similar approval ratings.
According to CNN, a survey of approval ratings for Vice President Harris, who is certain to be nominated by the Democratic Party, and former President Trump, the Republican nominee, in the U.S. presidential election revealed that neither of them has a clear lead in approval ratings.
According to CNN, a survey of approval ratings for Vice President Harris, who is certain to be nominated by the Democratic Party, and former President Trump, the Republican nominee, in the U.S. presidential election revealed that neither of them has a clear lead in approval ratings.
According to the latest data from Polymarket,In the 2024 U.S. presidential election, there is a 49% chance of both Harris and Trump winning.With a rapid increase in Harris' approval ratings and speculation about an early rate cut by the U.S. financial authorities, the so-called 'Trump trade' has taken a double blow.Due to Harris' entry, Trump's chances of winning have decreased and his trading has ended. As the market does not prefer uncertainty, the possibility of a Trump victory has decreased, leading to intensified competition.Furthermore, market risk appetite for macroeconomic factors has weakened.The market does not prefer uncertainty, which has led to a decrease in the possibility of a Trump victory and intensified competition, resulting in a decrease in risk appetite for macroeconomic factors..
- The Federal Reserve Board's policy interest rate: cautious about the slowdown in the U.S. economy, with a significant debate over a large interest rate cut being signaled.
Many financial institutionsexpect the Federal Reserve Board to start lowering interest rates after September.Before the financial policy decision meeting held by the Federal Reserve Board in September,economic indicators such as July and August CPI and August non-farm payroll numberswill be announced, confirming further expectations and patterns of interest rate cuts by the Federal Reserve Board. At the same time, the market expects that the Federal Reserve Board's interest rate cutswill signal an economic recession.We believe that it suggests whether the risk of an economic downturn is increasing and we have begun to pay attention to the US economy.
Many financial institutionsexpect the Federal Reserve Board to start lowering interest rates after September.Before the financial policy decision meeting held by the Federal Reserve Board in September,economic indicators such as July and August CPI and August non-farm payroll numberswill be announced, confirming further expectations and patterns of interest rate cuts by the Federal Reserve Board. At the same time, the market expects that the Federal Reserve Board's interest rate cutswill signal an economic recession.We believe that it suggests whether the risk of an economic downturn is increasing and we have begun to pay attention to the US economy.
●Nvidia's earnings reports, etc.
In addition, 6 out of 7 major US technology companies have already announced their earnings reports.Nvidia, which is scheduled to announce its earnings reports on August 28th,may have a significant impact on the entire semiconductor industry.
In addition, 6 out of 7 major US technology companies have already announced their earnings reports.Nvidia, which is scheduled to announce its earnings reports on August 28th,may have a significant impact on the entire semiconductor industry.
In addition,geopolitical risksThere are also concerns about how Iran will retaliate against Israel following the assassination of Hamas' top official, Ismail Haniyeh, in Tehran, Iran. Investors continue to pay attention to the situation in the Middle East, which also affects market risk preferences.
Source: Bloomberg, CNN, moomoo
This article uses auto-translation partially.
-moomoo News Zoe
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only.
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182076928鬼平 : Saying it's going down means shopping
Thank you very much
182076928鬼平 : I want to see reviews from other analysts
182076928鬼平 : The situation in the Middle East became chaotic due to the assassination of top Hamas executives, and it should be calculated that another crash is possible!
Toshi03 : This is just my personal impression, but I think the M7 was expected too much. I think M7 companies will continue to increase their performance in the future, but I feel that stock prices will not rise.