Morgan Stanley drops surprising message on tech stocks
Morgan Stanley’s Andrew Slimmon feels large-cap tech stocks are poised for a stunning comeback. Following months of underperformance, he feels the markets are underestimating the group’s next move.
That’s a shock take, to say the least, as the narrative around tech has soured of late.
Recently, we’ve seen a shift into industrials, cyclicals, and assets linked to interest-rate cuts, leaving the big guns in tech treading water.
For perspective, according to PortfoliosLab, the Industrial Select Sector SPDR Fund (XLI) is up 2.80% over the past month, while the Technology Select Sector SPDR Fund (XLK) is down 0.33%.
Though tech still leads on a full-year basis, things have clearly been rough lately.
To be fair, having covered the stock market for half a decade or so, especially the Magnificent 7, I’ve seen this movie before.
Investor sentiment can turn quickly, and stocks that felt virtually untouchable suddenly feel like yesterday’s trade.
Slimmon’s take cuts through that prevailing view.
He makes the case that large tech is looking a lot more reasonably priced than a lot of the sectors investors have rushed into. Earnings haven’t cracked, but expectations have.
The seven stocks that move the entire market
The Magnificent 7 is basically Mr. Market’s nickname for seven of the biggest mega-cap tech leaders that can effectively drag major benchmarks up or down almost by themselves.
A Bank of America strategist popularized the label, as the group dominated the S&P 500’s total capitalization.
More Tech Stocks:
Over the years, the concentration levels have gotten extreme.
Reuters reported the Mag 7 represents roughly one-third of the S&P 500’s weight and nearly 45% of the Nasdaq 100.
This prompted comments from Lisa Shalett, chief investment officer at Morgan Stanley Wealth Management, Reuters reported.
The Magnificent 7 (with tickers):
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Apple (AAPL)
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Microsoft (MSFT)
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Alphabet (GOOGL) (often paired with GOOG)
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Amazon (AMZN)
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Meta Platforms (META)
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Tesla (TSLA)
Andrew Slimmon’s case for why tech may be next
Slimmon argues that the Q4 sell-off in Big Tech had little to do with fundamentals breaking down.
In fact, it was mostly about investors chasing what felt safer and more timely, as rate-cut expectations took center stage.
Related: Major bank issues bold gold price target for 2026
The key point Slimmon makes is that earnings never cracked.
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