Analysis of the Magnificent Seven Tech Stocks
In the world of tech stocks, the “Magnificent Seven” is a term used to refer to the seven tech stocks that have been responsible for almost 50% of the S&P 500’s gains this year. These stocks have been driving the market and making investors a lot of money. However, in recent times, the Magnificent Seven have been experiencing some turbulence, with five of the seven components seeing stock declines in the last week’s trading.
Dispersion among the Contributions
One of the significant factors that can explain the turbulence in the Magnificent Seven is the huge dispersion between the contributions among the components to the S&P 500’s market cap. For example, Nvidia is up 965 billion dollars, while Tesla is down 231 billion dollars. Nvidia is responsible for 33% of the market cap gains of the S&P 500, while Tesla is responsible for 8%. Despite these differences, all seven of these stocks have very different narratives, and they are all impacted by a range of factors.
Tesla and Nvidia
Two of the significant constituents of the Magnificent Seven are Tesla and Nvidia. Tesla has been lagging behind its peers, with losses reaching nearly 30% since the start of the year. On the other hand, Nvidia has been performing exceptionally well, up about 78%. The fortunes of these two companies diverged in 2020, and this trend has continued into 2021. From a technical analysis perspective, Tesla has been in a giant trading range for the last five years, making it difficult to predict which direction it might go.
NASDAQ 100 Heat Map
In addition to the Magnificent Seven, there are numerous other tech stocks that investors are watching. The NASDAQ 100 Heat Map is a tool that provides a visual representation of the performance of these stocks. Here we can see that Tesla is headed towards Visa’s market cap next. It is essential to consider a range of factors when evaluating tech stocks, and while some have been performing well, others have been struggling to keep up.
Hot Take: The Future of the Magnificent Seven
The Magnificent Seven tech stocks have been driving the market for some time now, but recent turbulence has raised questions about their future. While some have been performing exceptionally well, others have been lagging behind. However, it is essential to remember that all of these stocks have different narratives and are impacted by various factors. As such, it is challenging to make any definitive predictions about their future performance. Investors should continue to monitor these stocks closely, considering both technical and fundamental analysis to make informed decisions.
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