Yardeni's "Magnificent 7" Stocks Weight Reduction Recommendation

Important Market Analysis from Ed Yardeni

Increased competition is expected for the attractive profit margins of technology giants known as the "Magnificent 7." Leading Wall Street analyst Ed Yardeni stated that productivity and profit margins in the S&P 500 are set to increase. Yardeni emphasized that every company is in the process of transforming into a technology company.

Change in Weighting in S&P 500

According to the research note published by Yardeni on Sunday, recommendations to increase the weighting of the information technology and communication services sectors have lost their validity since 2010. The strategist indicated that the weight of the finance and industrial sectors should be increased, highlighting the importance of investment in healthcare.

Competitive Situation of the Magnificent 7

In a statement made on Bloomberg television, Yardeni expressed that the increasing competition among the Magnificent 7 requires special attention. He pointed out changes in the sector, especially with the leadership of OpenAI and the emergence of DeepSeek this year.

Market Performance and Future Predictions

The value of the Magnificent 7 stocks, including companies like Nvidia, Meta, and Alphabet, has increased by over 600% since the end of 2019, while the S&P 500 has recorded a 113% increase. This rise has been shaped by the growing interest in technology companies following the Covid-19 pandemic and recent developments in the field of artificial intelligence.

Yardeni noted that global competitors have reservations about increasing the weighting of the US in the MSCI portfolio due to cheaper valuations and the resilience of corporate earnings obtained globally, considering this situation critical.

He pointed out that the US accounts for 65% of the world's stock market, emphasizing the difficulty of increasing already high weightings.