Benzinga - by Piero Cingari, Benzinga Staff Writer.
Wall Street veteran Ed Yardeni, president of Yardeni Research, spotlighted signs of vulnerability among the stock market’s beloved Magnificent Seven.
In a recent conversation on CNBC, Yardeni stressed concerns surrounding tech giants like Apple Inc. (NASDAQ:AAPL) and Tesla Inc. (NASDAQ:TSLA).
His analysis suggests a fragmentation within the ranks of the Magnificent Seven. “I think we are getting some splitting here among the Magnificent Seven, they are not all that magnificent,” he remarked.
Exposure To China Yardeni observed that many companies with significant exposure to China are coming to realize that the Chinese economy may be experiencing a slowdown, and consumer purchasing patterns are not what they used to be.
Specifically, Apple, which derives 20% of its revenue from China, experienced a 24% drop in its iPhone sales within the country this year.
The AI Angle Yardeni also highlighted the evolving narrative around artificial intelligence (AI) and its impact on these companies. “Apple hasn’t repeated the AI mantra too often,” Yardeni stated. The expert also underscored Apple’s retreat from the self-driving car market.
Conversely, the anticipation around Nvidia Corp.‘s (NASDAQ:NVDA) upcoming convention in San Jose, CA, presents a buoyant outlook for the AI and semiconductor sectors.
“I think that will continue to be a positive theme for the technology area and definitely the semiconductor area,” Yardeni asserted, emphasizing the growing divergence within the tech sector, especially among the Magnificent Seven.
Irrational Exuberance? Yardeni observed a mix of rational and potentially irrational exuberance among investors.
“If we are looking at the 1990s, which was the last time we talked about exuberance, I don’t think we are at 1999, just yet,” he noted.
This comparison suggests that while there is noticeable exuberance in the market today, Yardeni believes it has not reached the levels of irrational exuberance and speculative investment that characterized the period leading up to the dot-com bubble burst in 2000.
Yardeni also speculated on the Federal Reserve’s moves, suggesting, “There is a possibility that the Fed might not lower interest rates at all this year,” a stance backed by his belief that the economy is doing fine with interest rates where they are right now.
Yardeni expressed a tempered outlook, neither advocating for unchecked market exuberance nor predicting a downturn.
“I am certainly not rooting for an irrational exuberance, I am not rooting for a market melt-up, I’m rooting for the S&P 500 trading at 5,400 by the end of the year, not by the middle of the year,” he wrote.
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