Don't get it twisted: Wall Street's love affair with the "Magnificent Seven" is alive and well. DataTrek Research co-founder Jessica Rabe pointed out that, based on FactSet data, the average price target from analysts on the megacap tech group implies upside 14.4% over the next 12 months.
That's a greater gain than what strategists forecast for the S & P 500 as a whole — a gain of 11.9%. The expect gains for the Magnificent Seven are also greater than for stocks outside the group.
DataTrek looked at the 10 biggest nontech stocks in the S & P 500. It found the price targets for these stocks point to an average gain of 9.9%.
"While we take analysts' price targets with a grain of salt (as should you), they indicate that Wall Street sees more upside potential for Big Tech (ex-TSLA) than the S & P as a whole or the average of its 10 largest non-tech names," Rabe wrote in a note Wednesday. "That's good news for US public equity investors in that those 6 Big Tech names have an aggregate weighting that is more than double the latter group." Investors in recent weeks have been rotating out of the early 2024 Big Tech winners and into beaten-down areas of the market.
This dynamic is seen through the relative outperformance of the equal weighted S & P 500 versus its market cap weighted counterpart. The equal weighted version of the S & P 500 is down just 0.5% over the past month.
The market cap weighted one has shed 3.2% in that time. .
SPX RSP 1M mountain SPX vs RSP in past month Despi.