Folks, Goldman Sachs is calling attention to a major shift in some of the biggest names in tech. The Magnificent 7—Apple, Amazon, Alphabet, Meta, Microsoft, Nvidia, and Tesla—are now valued more cheaply than at any point since 2018. That might sound strange given how dominant these companies are, but according to Goldman, their stock prices are no longer as inflated compared to their earnings. These companies still carry a premium over the rest of the market, but it's a smaller one than usual. For long-term investors, this could be a rare moment of opportunity. | | | Understanding What "Cheap" Really Means
When Goldman Sachs says these stocks are "cheap," it doesn't mean they've fallen out of favor. It means their stock prices aren't as expensive compared to the money they're making and the strength of their businesses. Analyst David Kostin pointed out that the drop in valuation isn't just about performance—it's also about outside worries. These include rising concerns about AI spending, government scrutiny, and ongoing trade policy risks. Despite all this, Goldman's model suggests that the Magnificent 7 are actually undervalued when compared to the strength of their balance sheets and their expected earnings growth.
What's Behind the Discount?
Several factors have weighed down sentiment on these giants. Regulatory pressure is a big one. Governments in both the U.S. and Europe are increasing their focus on antitrust investigations, especially targeting firms like Alphabet, Apple, Meta, and Microsoft. At the same time, competition within the group is heating up. For example, Apple's rumored plan to launch its own AI-powered search engine recently rattled investors and sent Alphabet's stock sliding, a sign of just how reactive the market has become to internal rivalries.
Tailwinds Could Lift These Stocks Again
Still, Goldman sees reasons for optimism. The recent earnings season reminded investors just how central these companies remain to the AI revolution. That renewed excitement could drive new interest and help these stocks regain ground. On top of that, many big funds are underinvested in the Magnificent 7 right now, which could lead to buying pressure if sentiment shifts. With valuations lower than usual, these companies are positioned to benefit if market confidence returns.
| | | AI Hype Cycle Is Far From Over
While AI investment has brought volatility, it's also the main reason these stocks continue to draw attention. Nvidia and Microsoft in particular have become core pillars of the new digital economy, and their innovations are helping to shape what the next generation of technology will look like. Even Amazon and Meta are pushing deeper into AI infrastructure and services. As investor interest cycles back toward high-growth themes, these names could once again be seen as essential holdings—not speculative plays.
Positioning for the Second Half
Looking ahead, how these stocks perform will likely set the tone for broader market sentiment. If the Magnificent 7 regain momentum, they could help power another wave of growth-led investing. But even if some regulatory clouds linger, their financial strength and global reach offer a level of resilience few companies can match.
| | | For investors with a long enough view, Goldman's take might be a reminder that the best time to lean in isn't always when hype is highest—it's when doubt creates a pause. And right now, that pause may be presenting an opening. Anyways... That's all for now! Until Next Time, -Damian | P.S. Want our text alerts? Text "ZIPTRADER" to 1-(855)-228-1598 to sign up!
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