Mag 7 growth will decelerate, broaden to S&P 493: BofA Chart

The Magnificent Seven — the grouping of tech stocks Meta Platforms (META), Microsoft (MSFT), Alphabet (GOOGL, GOOG), Amazon (AMZN), Apple (AAPL), Nvidia (NVDA), Tesla (TSLA) — has been a tremendous growth driver for the S&P 500 (^GSPC), particularly in 2024. But is it about time for this growth trend to broaden out to other corners of the market?

Yahoo Finance anchor Madison Mills dissects Bank of America's forecast of where it sees growth drivers reaching the other 493 names in the S&P a year from now.

For more expert insight and the latest market action, click here to watch this full episode of Morning Brief.

This post was written by Luke Carberry Mogan.

Video Transcript

Sticking here with all things A I the new tech potential has helped boost investor optimism around the magnificent seven over the past few quarters here.

But Bank of America forecasts, they see the market's growth broadening out in the months ahead.

Catalyst co host Madison Mills takes a look in our chart of the day.

Hey Matty.

Hey Brad, thanks so much.

So it's really interesting.

This is the idea that the relative earnings of the names outside of the tech sector are going to to pick up as those earnings within tech.

Maybe that gas is getting a little bit taken out of the tank here.

I want to pull up our chart of the day behind me here for a second so that I can take a look for the first quarter of 2024 Bank of America estimating that over half of the eps growth came from those magnificent seven names.

Now, if we can move forward in the chart here, we can look ahead to the second quarter of 2024 here.

That's the quarter that we are just wrapping up.

You can see a little bit of an uptick in those other forgotten 493 a little bit more earnings growth coming in from those names.

As magnificent seven just starts to stall ever so slightly but still 36% growth not so bad.

And then when you take a look fast forward a year from where we're at right now, you see even more growth in those 493 names and a little bit less in that mag seven.

So what is the take away here?

Well, this morning Federated, her saying that the relative earnings of the tech compared with everything else, if that really does start to stall, it's kind of the ground of the bull market that we've had since those October 2022 low.

So that could be concerning for the path forward for this bull market having said that guys.

But I think it is really interesting is that this is kind of exactly what the market's been asking for, right.

We've been so concerned about the rally being concentrated in just a handful of seven names and now we're finally starting to see growth outside of those names.

Now, the market is getting jittery about that.

So I think what's interesting to note is as you can see behind me, that number, that growth overall is declining and it is difficult for tech to maintain this stellar record of growth year over year quarter over quarter.

So, of course, as you do see that growth kind of stalling a little bit there are questions about the path forward for this bull market, Shana.

Certainly lots of questions.

All right, Madison.

Great.

Thanks so much for bringing it down for us here.