Key Points in this Article
- Russell 2000 is up close to 12% in July while money has been flowing into small cap stocks.
- The “Magnificent 7” has been declining while investors take gains from big tech.
- If you’re looking for a megatrend with massive potential, make sure to grab a complimentary copy of our “The Next NVIDIA” report. The report includes a complete industry map of AI investments that includes many small caps.
The Magnificent 7 stocks have had a volatile summer so far, shaving off $1.7 trillion in market cap in a short two-week stretch. With the Dow Jones Industrial Average rising over 650 points today, while the S&P 500 and Nasdaq are both seeing green as well, market conditions appear to be looking up for Big Tech, though the results are mixed.
After taking the brunt of an investor rotation out of technology leaders and into lesser-known small-cap stocks, fueling an impressive 11.24% run in the Russell 2000 in July so far, Big Tech has reclaimed momentum, as evidenced by a rebound in most of the Magnificent 7 stocks. The initial market pivot away from tech leaders and into small caps was fueled by signs of easing inflation in June, fueling hopes of a reversal in the Federal Reserve’s monetary policy.
Meanwhile, tech names have been leading the broader market higher for much of this year, sending the S&P 500 index to multiple record highs in 2024. As the Magnificent 7 group looks to regain its rightful place in the pecking order, here’s a look at how these stocks are faring in July compared with their small-cap counterparts, suggesting the summer slump may be over for Big Tech. Whether or not the market rotation is over remains to be seen, but investors might want to hedge their bets just in case.
Today’s Roundup
Apple (Nasdaq: AAPL) shares are up fractionally on the day to approximately $218 per share. In July, shares of the iPhone maker have tacked on 2.3%, as the stock has held its own in the seemingly short-lived small-cap rotation. Investors may be feeling bullish about the prospects of an AI-powered iPhone 15 Pro and 16, models that are slated to make their debut in the coming months.
Meta (Nasdaq: META) stock is trading decidedly in the green, with a gain of nearly 3% on the day. In July, Meta shares have some catching up to do, as the stock is down 7.7% on the month. Investors could be awaiting Meta’s Q2 results, which are planned for July 31, to decide, but CEO Mark Zuckerberg insists that the company continues to gain market share.
Microsoft (Nasdaq: MSFT) shares have gained 1.5% on the day despite a 5.3% decline in July. Wall Street firm UBS is positive on the stock, with analysts suggesting the company’s AI market position coupled with growth in its cloud computing business should strengthen investor confidence.
Netflix (Nasdaq: NFLX) Netflix stock is taking it on the chin today, losing nearly 1% while many of its Magnificent 7 peers are trading higher. In July, Netflix shares have lost a steeper 6.5%. Netflix is a volatile stock, one that moves with the whims of sentiment. After seeing a 16.5% increase in its global subscribers in Q2, the company will phase out the publishing of its subscriber numbers.
Nvidia (Nasdaq: NVDA) stock is eking out a modest gain on the day to $112 per share but has yet to recapture a 9% decline in July. While Nvidia stock has been in the doldrums of late, Loop Capital analysts lifted their price target on this AI darling from $120 to $175 per share.
Tesla (Nasdaq: TSLA) stock is trading fractionally lower to end the week at $219 per share. However, Tesla stock has bucked the downward trend in the Magnificent 7 stocks of late, having gained approximately 9% in July so far. Tesla’s board is reportedly mulling a $5 billion allocation to his AI company xAI.
Alphabet (Nasdaq: GOOGL) shares aren’t participating in the rebound and remain fractionally lower on the day. In July, Alphabet stock has fallen a steeper 9.2%. Investors could be fleeing Alphabet stock in response to the narrative that AI is a threat to Google’s role in the future of internet search despite the fact that Google is investing heavily into AI too.
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