So Close to a Magnificent Bear
$800bn gone for the week
This was NDX’s worst week since the week of Liberation day - down over 3%. The NDX is now down 5 weeks in a row (longest losing stretch since the Spring of ’22) and is now lower on 8 of 9 weeks. The ‘Generals’ are being shot at as the Mag 7 lost a collective ~$800+ bn in market cap last week. Let's have a look at some of the most extreme charts in tech.
So close to a Magnificent Bear
Mag-7 -5% last week, worst week since April and fifth straight weekly loss (now down nearly -19% from the December closing high).
Source: Neil Sethi
Only seen in March 2020
Given their weighting in the index and importance to the market’s earnings overall, it’s surprising to see Mag 7 volatilities trade at a collective discount vs. the rest of the S&P single stock options market – something we’ve only seen in March 2020.
Source: Lee Coopersmith
Under the hood
Less than 15% of NDX constituents are above their 50DMA, which has historically signaled a near term bounce.
Source: Cullen Morgan
NVDA just on par
Nvidia now trades at par / slight discount to the S&P500 on fwd P/E for the first time in 10+ years. Yes, Nvidia is now trading at par with the S&P500 on fwd P/E despite, Nvidia alone expected to contribute to ~21% of the indices growth in 2026.
Source: Bloomberg
Black Gold > Blackwell
The white line is forward P/E ratio of NVDA; the blue line is the forward P/E ratio of XOM.
Source: Bloomberg
Macro-hard underperformance for Microsoft
MSFT has underperformed the S&P500 by ~20 pts this quarter… which registers as the largest quarter of underperformance in 25+ years.
Peter Callahan: "...candidly, investor interest and/or inbound levels still remain very low, even after this pullback (e.g. MSFT rarely comes up in ‘Mag 7’ convos these days)."
Source: LSEG Workspace
2 stocks drive 50%
The largest AI-related stocks in the index should drive more than 60% of S&P 500 EPS growth during Q1. Consensus estimates show NVDA and MU alone accounting for more than 50% of S&P 500 EPS growth this quarter.
Source: FactSet
Positioning: Far from extreme low
Mega-cap growth and tech positioning, according to the Deutsche Bank proxy.
Source: Deutsche Bank
Vs the rest
Where are Mag 7 and SPX ex-Mag 7 vs. RTY?
Source: LSEG Workspace
Tech median valuation
The sell-off in tech has brought down valuations to their median last 30-years.
Jeremy Schwatrz: "With the relative growth rates, more of tech looking like value stocks."
Source: Wisdom Tree
Pre-COVID levels
Tech at the cheapest levels vs. SPX since 2018.
