Magnificent-7

The AI Trade

Mar 28, 2025 3 min read

Two months ago at the World Economic Forum in Davos, Microsoft CEO Satya Nadella said, "All I know is, I'm good for my $80 billion" regarding the $500 billion Stargate AI announcement. His comments followed the emergence of DeepSeek's R1 large language model and chatbot, which was supposedly trained at much lower cost than state-of-the-art models built in the US. A February note from

Ed Yardeni
Eric Wallerstein

Another Growth Scare

Feb 27, 2025 3 min read

The stock market is in the midst of another growth scare, in our opinion. The latest batch of economic indicators has been weak. The current growth scare is reminiscent of last summer's scare. It is just as likely to pass if the next batch of economic indicators improves, as we expect. That still leaves policy uncertainty under Trump 2.0 to spook stock investors. We still expect that

Ed Yardeni
Eric Wallerstein

The Digital Revolution Marches On As Nvidia Beats

Feb 26, 2025 3 min read paid

Artificial intelligence, and all the capital spending that comes along with it, is here to stay. Nvidia reported today that its sales last quarter rose 78% y/y to $39.3 billion, and management’s revenue guidance of $43.0 billion (+/- 2%) for the current quarter was above the consensus estimate of $41.8 billion. Moreover, the company laid out plans to get its new Blackwell chips to market

Ed Yardeni
Eric Wallerstein

MARKET CALL: Will DeepSeek Sink The Unsinkable Mag-7?

Jan 26, 2025 3 min read paid

The Q4-2024 earnings reporting season is going well so far. It started out two weeks ago with better-than-expected big bank earnings. As a result, industry analysts increased their consensus expected Q4 earnings growth rate for the S&P 500 companies collectively from 8.2% y/y to 9.1% y/y (chart). We raised our expected earnings growth rate from 10.0% to 12.0%. The next round of

Ed Yardeni
Eric Wallerstein

MARKET CALL: Will Trump 2.0 Be Volatile?

Dec 8, 2024 3 min read paid

In recent conversations with our accounts, many of them said that the financial markets may be more volatile under Trump 2.0 over the next six months than they were over the past 12-18 months. In Thursday's QT, we observed that contrarian indicators are showing that there are too many bulls, which is bearish. A couple of prominent and vocal permabears recently conceded that the bulls have been

Ed Yardeni
Eric Wallerstein

Contrarian Curses & Tricky Cross Currents Since September 18

Nov 4, 2024 3 min read paid

Investors often rejoice when a stock they own is selected to join a major market index. Index funds collectively have trillions of dollars in AUM and must buy the stock in bulk, giving a boost to its price. But sometimes these bestowed honors can be a curse for the newbie. Super Micro Computer, for instance, joined the S&P 500 on March 18. It had peaked at a record

Ed Yardeni
Eric Wallerstein

Going Nowhere Fast?

Oct 30, 2024 3 min read

The S&P 500 equal-weighted index has been going nowhere fast since the Fed cut the federal funds rate (FFR) by 50bps on September 18 (chart). The same can be said for the Russell 2000. The stock market rally has stopped broadening since the Fed's rate cut! Why is that given that the current earnings season has been mostly upbeat? The problem is that the bond yield

Ed Yardeni
Eric Wallerstein

Lots of Moving Parts

Jul 25, 2024 3 min read paid

The stock market started to rotate out of LargeCaps and into SMidCaps after June's CPI was released on July 11 (chart). It showed lower-than-expected inflation, which increased the odds that the Fed would start cutting the federal funds rate (FFR) in September and triggered the rotation because small companies tend to depend more on floating-rate debt than large ones. Easier monetary policy would also reduce the likelihood of

Ed Yardeni
Eric Wallerstein

Market Call: The Magnificent One?

May 27, 2024 2 min read paid

Stock market pundits have been bemoaning the narrowness of the current bull market that started on October 12, 2022. It has been led by the Magnificent-7. Now the pundits are fretting that it is being led by just Nvidia, which is up 115.0% ytd versus 11.2% for the S&P 500 (chart). It is also significantly outperforming the Magnificent-6 so far this year. Nvidia is the only

Ed Yardeni

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