Ed Yadeni Yadeni, head of Yadeni Research, a leading tech stock bullish on Wall Street, recommended ..

Ed Yadeni Yadeni, head of Yadeni Research, a leading tech stock bullish on Wall Street, recommended reducing the proportion of large U.S. tech stocks for the first time in 15 years, drawing keen attention from investors. The Wall Street veteran market strategist has been offering an overweight opinion on tech stocks over the past 15 years. In particular, it was recommended to reduce the proportion of Magnificent 7 (M7, Amazon Alphabet, Apple, Nvidia, Microsoft and Meta Tesla), which is loved by Korean calligraphy ants.

According to Bloomberg and others on the 8th (local time), CEO Yardeni said, “There are many competitors seeking a high profit rate for M7, and the technology and telecommunications sectors already account for a high proportion of the S&P 500,” and advised, “It is better to readjust the portfolio concentrated in the technology and telecommunications sectors due to the increased risk.” The technology and telecommunications sectors account for 45% of the S&P 500 index. “We expect the productivity and profit rate of the rest of the S&P 500 to increase by technology,” Yardeni said. “In fact, all companies are evolving into technology companies.” It is argued that the growth of large technology stocks will fade and the benefits of technological development will spread throughout the U.S. industry.

CEO Yardeni called S&P 500 stocks except M7 “Impressive 493” and recommended portfolio expansion. “There are still many good companies that have or are already using artificial intelligence (AI) technology,” he said. “It makes sense to expand our portfolio from M7 to the remaining 493 stocks.”

M7 led the growth of the U.S. stock market, but the momentum for the recent rise has subsided. Since 2019, the M7 yield has risen more than 600%, but the S&P 500 index has risen 113% over the same period.

Since the 20th of last month, when the U.S. stock market hit a short-term low, the Bloomberg M7 price return index has risen only 6%. On the other hand, the Dow Jones Transportation Average rose 11% and the Russell 2000 Index, which is centered on small-cap stocks, rose 10%.

Yardeni Research presented a forecast for next year’s S&P 500 at 7700. The figure is about 20% higher than today. Wall Street estimates are not particularly high, ranging from 7,100 to 8000. Yardeni Research predicted that the Donald Trump administration’s efforts to resolve housing prices, tax benefits under the “One Big and Beautiful Bill (OBBBA), the Federal Reserve’s interest rate cut, and the AI craze will support growth. In particular, investment opinions in the financial and healthcare sectors maintained an increase in weight.

U.S. investment advisory firm Strathegus Asset Management also recommended customers invest in the S&P 500 incorporation at an equal rate. This means reducing the structure that excessively reflects large market capitalization companies with large index influence and investing equally in all companies.

Some argue that although the M7 stock price has weakened from the past, the upward momentum is effective. This is because the influence of high-tech technologies such as AI remains and the valuation burden of technology stocks is lower than at the beginning of the year.

Huh Jae-hwan, a researcher at Eugene Investment & Securities, explained, “M7’s valuation has decreased from the beginning of the year (28.09 times) based on the expected 12-month price-to-earnings ratio (PER).”