BofA: Big Tech Stock Rally Looks Stretched, Needs New Highs

The robust rally propelling the so-called “Magnificent Seven” US technology stocks, which have collectively surged by an impressive 45% since April, now appears to be stretched, according to strategists at Bank of America Corp.

In a report released Thursday, the team led by strategist Michael Hartnett indicated that investors maintaining bullish positions in market giants such as Nvidia Corp., Microsoft Corp., and Meta Platforms Inc. will require key indexes tracking these companies to reach fresh highs to sustain confidence in their exceptional performance.

The “Magnificent Seven” designation refers to a select group of highly influential technology companies whose substantial market capitalization and rapid growth have been primary drivers of overall market gains in recent periods. Their strong performance, exemplified by leading chipmaker Nvidia, software giant Microsoft, and social media powerhouse Meta Platforms, has been a defining characteristic of the market landscape since the spring.

Bank of America’s analysis suggests a growing caution that the current pace of this rally may not be sustainable without further demonstrable indicators of growth. The requirement for new highs in tracking indexes underscores the strategists’ view that investors may demand concrete evidence of continued expansion to justify present valuations and maintain their confidence in these stocks’ upward trajectory.