Wall Street investment bank Goldman Sachs (GS) says it’s time to reconsider the beaten-down mega-cap technology stocks, collectively known as the Magnificent 7.
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New trading tool for NVDA bearsWith markets rebounding on news of a ceasefire between the U.S. and Iran, Goldman Sachs is urging investors to look for growth opportunities in the Magnificent 7 names that include Apple (AAPL), Amazon (AMZN), Alphabet (GOOGL), Meta Platforms (META), Microsoft (MSFT), Nvidia (NVDA), and Tesla (TSLA).
Peter Oppenheimer, Chief Global Equity Strategist at Goldman Sachs, says that a “generational buying opportunity” has opened up in U.S. technology stocks after they got knocked lower in recent months over concerns about an artificial intelligence (AI) bubble and hefty capital expenditures.
Growth Opportunities
Oppenheimer points out in a note to clients that technology stocks are in the midst of their worst stretch of performance against the broader market in 50 years. This has opened up the best opportunity in decades to buy the beaten-down technology stocks.
The Goldman Sachs executive adds that mega-cap technology stocks such as Microsoft and Nvidia have been overly punished and that the declines don’t reflect their strong growth rates. He points out that many leading technology stocks, such as Apple and Amazon, are now trading at lower multiples than a lot of consumer stocks.
Is MSFT Stock a Buy?
Let’s look at Microsoft’s stock, which is down 20% year-to-date. Microsoft has a consensus Strong Buy rating among 37 Wall Street analysts. That rating is based on 34 Buy and three Hold recommendations issued in the last three months. The average MSFT price target of $581.61 implies 56% upside from current levels.
