Morgan Stanley Wealth Management says Magnificent Seven valuation premium has fallen to 10%, lowest in over a decade

According to CNBC, Morgan Stanley Wealth Management’s Global Investment Committee said the valuation premium for the “Magnificent Seven” over the other 493 S&P 500 stocks is now 10%, the lowest in more than a decade, while the group still has a 45% annual earnings growth advantage. The report noted the iShares Semiconductor ETF (SOXX) is up about 85% year to date, while the Roundhill Magnificent Seven ETF (MAGS) is down slightly and the S&P 500 is up nearly 9%. Lisa Shalett, head of the global investment office at Morgan Stanley Wealth Management, said she would reduce exposure to semiconductor stocks and selectively add back Magnificent Seven names she sees as best positioned in the AI race, citing a shift away from “tokenmaxxing” that could benefit hyperscalers such as Alphabet, Amazon and Microsoft. CNBC also reported that Nvidia has a next 12-month P/E of 18.7 versus a historical P/E of 36.9, and that Bank of America Securities reiterated the stock as a buy this week, with analyst Vivek Arya saying he would buy the dip.