Mag7 Are Getting Cheaper, Is It Time to Buy the Dip?
After a searing rally this year, the tech-heavy $NASDAQ 100 Index (.NDX.US)$ is down more than 13% from an all-time high hit last month in a sell-off that has been blamed on everything from US economic worries to the unwinding of a global yen-funded carry trade.
The “Magnificent Seven” were the stocks most responsible for the overall market’s decline since last Friday. In just four trading days, $Tesla (TSLA.US)$plummeted 17.37% and $NVIDIA (NVDA.US)$ dropped below the $100 mark.
The sell-off has made tech stocks less expensive based on price-to-earnings ratios, boosting their allure to investors who had previously been reluctant to jump aboard. Over half of the "Magnificent Seven" are trading at a discount relative to their five-year average P/E.
The forward price-to-earnings (P/E) ratios of $Tesla (TSLA.US)$ and $NVIDIA (NVDA.US)$ are trading at a discount of about 25% relative to their average levels over the past five years, while $Amazon (AMZN.US)$'s discount exceeds 40%. The “Magnificent seven” are getting cheaper. So, is it time to buy the dip?
Some investors wasted little time in diving in. Global hedge funds went on their largest one-day buying spree in five months on Monday, in the midst of a sell-off in which the S&P 500 fell by as much as 4.25%, Goldman Sachs said in a note. Most of the buying was concentrated in the tech sector, with semiconductors among the most popular sectors, according to the bank, which tracks the buying of its hedge-fund clients.
Cathie Wood and ARK Invest were highly active on Monday, the top buy was $Amazon (AMZN.US)$, the firm purchased a total of 174,498 shares worth nearly $28.1 million. In addition, Wood added more than 12,000 shares of $Meta Platforms (META.US)$ and $Tesla (TSLA.US)$ on Monday, worth $5.96 million and $2.47 million, respectively.
While economic worries have been components of the recent sell-off, investors could gravitate toward mega-cap tech stocks if those concerns persist, said Garrett Melson, portfolio strategist at Natixis Investment Managers Solutions.
The mega-cap companies' "bullet-proof" balance sheets and their ability to increase earnings even in rocky economic times have made them "the new, defensive safe havens" in many investors' eyes, Melson said, “and their valuations have improved.”
Besides, Nvidia’s stock offers 'tremendous opportunity' after sell-off, according to Piper Sandler analysts.
$NVIDIA (NVDA.US)$ shares have taken a steep drop in recent weeks, and the delays in the launch of the new Blackwell chip also bake in some concerns.
With that in mind, Piper Sandler’s Harsh Kumar sees “tremendous opportunity.” He took Nvidia’s recent statement on the reported Blackwell chip delay to mean that “it is not anticipating any meaningful impact or delays to the timing of its Blackwell chip,” and even if the ramp were pushed back a bit, Kumar pegged the impact at only about $1 billion of October-quarter revenue and $2 billion to $3 billion of January-quarter revenue.
However, to be sure, while markets have stabilized over the past two sessions, it remains to be seen if the recent bout of volatility is over. Uncertainty over the economic landscape will be tested in coming days, with weekly U.S. jobless claims on Thursday and the monthly consumer price index inflation data on Aug 14. As a result, some investors believe there may be better opportunities to buy tech stocks down the road.
Mooers, do you think this sell-off among the “Magnificent Seven” presents a buy-the-dip opportunity? Have you increased your holdings in these giants during this sharp tumble?
Source: Reuters, MarketWatch
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only.
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lostmypizza : How to show candle sticks?
103775337 : time to sell
jp676 : Prices for the Mag7 could be cheaper next month. I’m doing a modified DCA and holding long term 3-5 years.
图图 : may
Joesea : sell
Gwapp Diidit : hey
John E Vasquez : Interesting. Something to think about
XJ3005 : Wait for the jobs number and The Fed's decision.
Kelly_Liu : May be
BelleWeather : Yes and yes. I’ve added AMZN, NVDA, GOOGL & TSLA shares & sold contracts on NVDA.
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