Are Magnificent 7 valuations attractive again?

The "Magnificent Seven" tech stocks have been under investor scrutiny due to their high valuations. However, recent trading weeks have seen these valuations decline, prompting investors to question whether these stocks are becoming attractive investment opportunities once again.

Yahoo Finance reporter Josh Schafer analyzes the current state of these Big Tech valuations.

For more expert insight and the latest market action, click here to watch this full episode of Asking for a Trend.

This post was written by Angel Smith

Video transcript

Bloomberg's magnificent seven valuations Index is heading south.

Yahoo, Finance is Josh Shafer is back with us now for a closer look on what that means for investors.

Josh, what does it mean?

Hey, Julie.

Yeah, well, Zach, Brian referenced there, maybe heading south, One of my favourites.

But we got to talk about this magnificent seven valuations Index that we're looking at here.

We're talking about the forward PE of the mag seven for a 12 month PE.

You can see here it's been tricking down over this drawdown that we've seen in the S and P 500.

And I highlight this today because this has been one of the key bear talking points for the mag seven and tech in general has been that tech is overvalued.

Valuations have gotten unattractive, like they did in 2021 when stocks started and the magnificent seven came way down.

And so is the The question I've been asking folks right now is essentially Are we at a point where this valuation is attractive again, or do we still need to see more PE contraction in the mag seven Moving forward?

This is a question that we posed to David Bonson earlier today, and I wanna take a listen to what he had to say to us right now.

So there is a lot of both fundamental and certainly just valuation risk around the A I big tech trade and that there's plenty of more oxygen to come out of that.

And when it happens and how much it happens, I don't know.

But it's going to happen.

Yeah, so David, saying he thinks that essentially this chart that's currently trending to the right is gonna keep falling lower, and he's not quite sure where valuations are gonna bottom and people want to get back in.

But I should note that is not necessarily been sort of the consensus take at this point.

We've had folks like BlackRock coming out and saying that they think that tech valuations are still something to be involved in right now, specifically because of that a I trade.

They think that a pullback is an opportunity to get into a secular trend when we talk about some of these companies in the mag seven.

Our friend Keith Lerner, over at Truist upgraded Tech last week talking about some of the tech stocks and the large pull back that we've seen.

That includes names within the mag seven, Of course, when we talk tech.

So it's a debate that is ongoing right now.

But as valuations pull back, Julie, it's gonna be interesting when people start saying it is time to buy back.

Yes, it will.

We've been talking about all that macro data, but NVIDIA earnings at the end of the month are probably gonna be pretty important for what happens with those text stocks.

Thank you, Josh.

Appreciate it.