Yardeni Research Shifts Focus from 'Magnificent 7' to Broader Market

Yardeni Research has downgraded its stance on major U.S. tech stocks, ending a 15-year bullish view due to concerns over market concentration. The firm suggests underweighting the 'Magnificent 7' stocks and focusing on the broader market, emphasizing opportunities in financials, industrials, and healthcare sectors instead.

Yardeni Research, led by Wall Street veteran Ed Yardeni, recently shifted its investment strategy away from the 'Magnificent 7' U.S. tech stocks, marking the end of a 15-year bullish stance. The firm cited concerns over elevated market concentration and new opportunities in the broader market as reasons for the change.

The research firm now advises investors to 'underweight' the top seven tech stocks while advocating for increased investment in the remaining 493 companies within the S&P 500 index. Yardeni suggests a balanced approach to constructing portfolios, maintaining 'market weight' in information technology and communication services sectors, and turning 'overweight' in financials, industrials, and healthcare.

This shift comes amid expectations that more rivals will compete for profit margins held by the 'Magnificent 7.' Yardeni also forecasts increased productivity and profitability in other S&P 500 stocks. The decision is driven by the belief that an increasing number of companies are incorporating technological advancements into their business models.

(With inputs from agencies.)