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Does Wall Street's favorite class of tech stocks need a change? Some investors think so.
Most of the Magnificent Seven stocks have regained market leadership this year, with Nvidia, Metaplatform, Alphabet and Microsoft reaching record highs. However, two stocks within the group have not been able to demonstrate their strength.
Tesla shares have fallen about 25% this year on concerns about increased competition from Chinese electric car makers and the company's reported missed results for the second year in a row in January. Apple's stock price fell about 2% over the same period due to concerns about declining sales in China.
Meanwhile, the stock prices of Nvidia, Meta, Amazon, Microsoft, and Alphabet have continued to rise since last year. Meta exceeded fourth-quarter profit expectations in its earnings report on February 1, announced its first-ever dividend, and the next day its stock price soared more than 20%, setting a new record.
Many investors are skeptical that even if The Magnificent Seven maintains its leadership this year, it will be able to match blockbuster profits in 2023 and beyond. Some say the divergence in the group's performance indicates a new hierarchy is emerging.
Jim Worden, chief investment officer at Wealth Consulting Group, said he believes the group should be combined into the Fab Five, which is the Magnificent Seven minus Tesla and Apple. .
“The challenges that both Apple and Tesla have in terms of consumers, China and growth are going to get even more difficult,” Worden said.
In a research note last May, Bank of America strategist Michael Hartnett coined the term “Magnificent Seven” after the 1960 American Western movie of the same name. The word quickly caught fire on Wall Street as these stocks raced higher as interest rates hovered at 23-year highs, geopolitical turmoil swirled and investors grappled with the local banking crisis. , the S&P 500 index rose 24% last year.
Nvidia's stock price, the biggest gainer within the group and among the benchmark indexes, soared a whopping 239% in 2023, with the rest of the elite tech group also posting double- or triple-digit gains.
The big board of tech stocks has seen realignments in the past. For years, the FAANG stocks, coined by Jim Cramer (Meta, parent of Facebook, Alphabet Inc., parent of Apple, Amazon, Netflix, and Google), have been viewed as top contenders in the market. . Then, as the Federal Reserve launched an aggressive interest rate hike campaign in 2022 and investors fled growth stocks, tech names took a beating.
This year has also seen increased interest in other smaller artificial intelligence players. The supermicrocomputer's stock price has risen 246% in 2023 and 140% in 2024 so far after the company reported better-than-expected second-quarter results in January and raised its full-year revenue forecast. %It is rising. Nvidia and chip maker Advanced Micro Devices are among the server maker's customers.
“Significant management change is underway in Magnificent Seven stock,” Louis Navellier, chairman of Navellier & Associates, said in a note Tuesday. “Money continues to move toward more small- and mid-cap stocks that are thriving with explosive sales and profit growth.”
Still, some investors are clinging to the Magnificent Seven's laggards. Nancy Tengler, chief investment officer at Laffer Tengler Investments, said the company plans to further increase its position in Tesla if the stock drops to $160. The electric car maker's stock closed Wednesday at $187.58 per share.
She said she takes a long-term view of the stock and believes the company's innovations in developing self-driving software and EV charging stations will help cushion the blow from demand issues.
“We're not going to write off underperforming companies,” Tengler said.
After a recent trip to the Walt Disney World Resort in Orlando, Florida, with her husband and two children, Gina Lee said she felt like she had “lost all concept of money and time.”
“The prices have gone up. It's crazy,” said the New York-based content creator. “When I go to Disney, it feels like I'm preparing for a wedding. You're like, 'Well, I'm already in it, so what's another $20 or $30?' Before you know it, you're out of control and you're stuck in a Disney mindset. ”
According to my colleague Samantha DeRuya, the price of Disney productions overall has increased in recent years.
Not only are theme park admission prices soaring, but so are Disney cruise trips, souvenirs and the company's streaming services. The company's timeshare program, Disney Vacation Club, increased its rates on January 30th. Over the summer, Disney quietly raised prices at two adult-only restaurants on cruise ships, raising dinner prices by $10 per person to $135. According to the Disney Cruise Line blog.
Some of these increases are modest and common to Disney's rivals in the entertainment and travel businesses. Inflation also plays a big role. But one thing is for sure: being a Disney fan is more expensive than ever.
The price increase comes as Disney faces a turning point in its history. The global entertainment giant is struggling with a still-unprofitable shift to streaming, recent box office failures (including the quickly forgotten animated film “Wish” released in November) and an uncertain CEO succession plan. We are working. Disney's legal battle with Florida Governor Ron DeSantis, who owns Disney's largest and most profitable theme park, continues.
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Semiconductor giant Taiwan Semiconductor Manufacturing Company (TSMC) is increasing production in Japan as it continues to expand its global presence, my colleague reported. Diksha madhok.
TSMC, the world's largest chipmaker, will build a second semiconductor manufacturing plant (fab) in the country “in response to growing customer demand,” it said in a statement on Tuesday.
Japan Advanced Semiconductor Manufacturing (JASM), a majority-owned subsidiary of TSMC, added that it plans to begin construction by the end of 2024. The facility is expected to be operational by the end of 2027.
The company has announced that it will build a second semiconductor factory in the southwestern US state in 2022, increasing its total investment in Arizona from $12 billion to $40 billion, in addition to its existing factory plans.
The investment was previously hailed by US President Joe Biden as a sign that US manufacturing is “back”.
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