Goldman Sachs Says the Magnificent 7 Are Set to Rebound This Summer
Confident Investing Starts Here:
John Flood of Goldman Sachs sees it differently. In a June 3 commentary titled Revenge of the Magnificent 7, he argues that the recent sell-off might be a buying opportunity. The group just beat earnings expectations by 13%, yet stock prices are down. This disconnect means their valuations are now more reasonable compared to past years.
Flood Points to Key Catalysts
Flood points out that the valuation premium these companies enjoyed has dropped sharply. Despite their size, these firms are showing strong profit growth, with forward profit margins at record levels. They also tend to be less dependent on economic cycles, giving them a more defensive profile when the outlook turns uncertain.
Positioning is another factor. Many mutual and hedge funds are still underweight these names. If sentiment improves, there's plenty of room for institutional buying. Flood sees this 'dry powder' as a potential tailwind.
He also brings in seasonality. July is historically strong for corporate buybacks, and many of the Magnificent 7 are known for their large repurchase programs. That should provide additional support for stock prices in the weeks ahead.
All these signals point to better earnings, lower valuations, defensive business models, underweight institutional exposure, and seasonal buyback strength, leading Flood to expect the Mag 7 to outperform the broader market this summer. In short, if Flood is right, this summer could mark a return to form for the market's most-watched stocks.
Using Tipranks' Comparison Tool, we've assembled the Magnificent 7 and compared notable performance factors to gain a broader perspective on each of the stocks.
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