Magnificent 7 Stocks Aren’t Too Pricey, JPMorgan Strategist Says

The ranks of Wall Street strategists playing down concerns around a bubble in US technology megacap stocks are growing.

The team at JPMorgan Chase & Co. was the latest to flag that valuations of the seven tech giants that have powered the record-breaking rally on Wall Street are currently lower relative to the rest of the S&P 500 than the average of the past five years.

“There is a concern over the very strong outperformance of the Magnificent 7, but we note that the group is currently trading less stretched than a few years ago, given earnings delivery,” strategist Mislav Matejka wrote in a note. “This is not to say that the group is immune to profit disappointments ahead, but in the case of general earnings disappointment, these stocks could still hold out better than traditional cyclicals” reliant on strength in the economy, he said.

Strategists at Goldman Sachs Group Inc. also said last week that while the US equity market’s concentration is the highest in decades, the top stocks trade at much lower valuations than the largest names did at the peak of the tech bubble.