'Mag 7' stocks starting to compete against each other, says Ed Yardeni

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Yardeni Research 4.8
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Ed Yardeni 9.0

'Mag 7' stocks starting to compete against each other, says Ed Yardeni

ndx

Yes, we're in a bubble and the bubble is losing air... Valuation multiples are coming down. Attributed to AI-driven competition within the Magnificent Seven eroding moats and margins, leading to a rotation into other parts of the market (e.g., 'impressive 493', financials).

12/8/2025 10:28:17 AM	medium term cautious down	20 days later	-0.56%	+0.28%
11/12/2025 9:22:53 AM	short term up	5 days later	-1.96%	-1.96%
11/10/2025 1:58:05 PM	short term up	6 days later	-2.87%	-2.87%
10/27/2025 1:01:15 PM	short term up	6 days later	-0.15%	-0.15%
9/19/2025 1:42:29 AM	short term sharp up	7 days later	-0.60%	-0.91%
9/11/2025 10:44:08 PM	medium term sharp up	20 days later	+3.32%	+4.98%
9/9/2025 5:01:26 PM	medium term up	20 days later	+3.48%	+3.48%
8/25/2025 2:53:09 PM	medium term up	20 days later	+3.27%	+3.27%

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rut

Notes 'small cap stocks doing quite well with the Russell 2000 at a record high' as part of the market rotation away from the Magnificent Seven, implying continued positive momentum.

Questions the argument that current tech valuations have a permanently higher floor/ceiling and shouldn't be compared to history.

Host
Ed Yardeni

Acknowledges the 'this time is different' argument often fails. Notes current S&P 500 forward PE (~30) is below 1999 tech bubble levels (~50).

Points to less seller financing and no Y2K spending issues today versus 1999, but cites circular financing and earnings quality as current concerns.
Ed Yardeni

Recommended underweighting the Magnificent Seven last week due to aggressive intra-group competition.

Suggests moving to other tech areas while continuing to overweight financials and industrials.
Asks if non-Magnificent Seven stocks can be valued using historical averages, or if mega-caps are in their own league.

Host
Ed Yardeni

Rejects a radically different valuation paradigm. States high valuations follow high growth expectations.

Contrasts 1999 (few called it a bubble beforehand) with today (constant bubble questions).
Ed Yardeni

Explicitly states, 'Yes, we're in a bubble and the bubble is losing air. It's not bursting. It's losing air. Valuation multiples are coming down.'

Attributes this to AI causing the Magnificent Seven to compete, eroding moats and margins, using a 'Game of Thrones' analogy.
Asks if the AI bubble party ends this year or in 2026, noting many expect several more years.

Host
Ed Yardeni

Sees signs the Magnificent Seven are viewed as 'a little less magnificent,' with focus shifting to the 'impressive 493' and small/mid-caps (Russell 2000 at record high).

Cites Michael Burry raising uncertainties about future growth rates and ROI on massive AI capital spending. Believes the bull market continues but money will rotate away from Mag 7 into financials and healthcare.

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