Time for the Magnificent Seven to step up to the plate?

<p>In the past year, shares of Meta,
Amazon, Apple, Nvidia, Alphabet, Microsoft, and Tesla have collectively soared
more than 96%, leaving the 22.7% growth of the S&amp;P 500 in the dust. </p><p>Such impressive performance cannot
continue forever unless these companies make another meaningful discovery (such
as developing another artificial intelligence).</p><p>In the meantime, one of the main risks
for the top 7 stocks is that the corporate earnings growth train may slow with
the global economy's slowing. </p><p>This has led analysts to downgrade
their expectations for the <a href="https://www.investopedia.com/magnificent-seven-stocks-8402262" target="_blank" rel="follow">Magnificent Seven</a>.</p><p>Take Amundi, a European asset
management giant with $2 trillion under management. They do not expect these
large-cap stocks to maintain their stellar performance. </p><p>Given the high price of these stocks,
could there be a risk of a market correction?</p><p>Normally, what you look at is the
general market situation. If fear increases among investors, they would
normally flock to the safer assets, which would cause the riskier ones to fall.</p><p>However, this has not been the case in
the last two years. On the contrary, the dollar, <a href="https://www.tradingview.com/symbols/XAUUSD/" target="_blank" rel="follow">gold price</a>, and
bonds have risen, but the big technology stocks have held firm.</p><p>All this is due to the belief in the
"too big to fail" principle: these companies will not disappear if
things get worse.</p><p>So, what could be the trigger for a
correction?</p><p>Well, Tesla's stock could hold the
key: <a href="https://www.bbc.com/news/business-68086212" target="_blank" rel="follow">falling confidence in consumer demand</a>, production problems, and, most importantly,
lackluster quarterly results.</p><p>FactSet estimates that, excluding
Tesla stock, the Magnificent Seven will post combined fourth-quarter earnings
growth of 53.7% from a year earlier.</p><p>In comparison, companies in the
S&amp;P 500 index are expected to post earnings declines of 10.5%, excluding
those six companies.</p><p>But the point is that analysts often
get their forecasts wrong and sometimes intentionally underestimate them.</p><p>Betting against the market, expecting
weak quarterly results, seems a risky move. On the other hand, “nothing
ventured, nothing gained”…</p><p>What about stimulus factors?</p><p>A possible lifeline for the big tech
stocks could come from a <a href="https://uk.advfn.com/newspaper/igorkuchma/73121/will-the-fed-s-change-in-rhetoric-provide-long-term-momentum" target="_blank" rel="follow">change in the Fed's monetary policy</a>. However, with strong GDP data and uncertainty over
the conquest of inflation (thanks to geopolitical risks), talk of rate cuts
seems a little premature.</p><p>Answering the question of whether it
is a good idea to increase your investment in the Magnificent Seven now, the
potential return seems lower than the risk you would take. Ultimately, however,
the decision should depend on your own research.</p>

This article was written by FL Contributors at www.forexlive.com.