In CNBC’s article “Mag 7 stocks are cheap and a buy after sell-off as long as no recession, Morgan Stanley says,” Samantha Subin quotes analyst Erik Woodring saying, “As a result, we’d conclude that while Mag 7 valuations still face significant downside valuation risk in a black swan or recession scenario, current Mag 7 valuations relative to future growth prospects are attractive after the recent drawdown,” On Wednesday, the stock market tried to bounce back from recent losses but faced difficulties as big tech companies saw major drops. Nvidia, a top tech firm, had a 5.1% fall in its share price, and Tesla also dropped by 4.4%. Other key tech companies, like Meta Platforms and Microsoft, saw their shares fall by 1.1% and 0.3%, respectively. This overall decline caused the Nasdaq Composite to drop by 1.1%, ending at 16,195.81. The Dow Jones Industrial Average and the S&P 500 also finished lower, showing a broader market decline.
Despite these setbacks, Nvidia’s shares are 37% below their peak, and the Nasdaq is down 15% there could be a chance for investors. Erik suggests that the recent drop in tech stock values might be a buying opportunity if the U.S. economy avoids a recession. Woodring pointed out that the “Magnificent Seven” tech stocks have fallen by an average of 8.6% this month, but their current prices might still be attractive considering future earnings growth. Though there are risks from possible economic downturns or unexpected market events, the lower stock prices could offer a good investment opportunity after the recent market correction.
The tech sector’s recent decline has been worsened by factors like a weaker-than-expected July jobs report and changes in currency trading, including the unwinding of the yen carry trade. As investor interest shifts away from tech stocks, caution is evident. However, for those ready to handle the current volatility, the lower prices of top tech companies might provide a good chance for potential long-term gains, assuming economic conditions stay stable.
Comments