Goldman Sachs managing director Lee Coppersmith says the Magnificent Seven stocks could be primed for a rebound.
In his latest outlook, Coppersmith compares the current market environment to the March 2020 COVID-related drawdown.
“During that span, just like today, what it kind of really revealed was that the market had lost its confidence in those Mag 7 stocks as being the leaders. And so, I would tell you that I think if you were to, you know, see what happened back then, obviously, post-COVID, obviously, the reemergence of those companies took place. And it was a really great opportunity to be putting on those upside expressions, particularly in those companies. Whether you did them outright. Or if you did them versus the rest of the market, right?
And so, what we would say today to clients is that if you wanted to basically look at ways to raise your exposure to the broader market as a whole after a month of basically derisking, this presents another really attractive opportunity for clients to use those expressions as a way to get longer on the market as a whole.”
Coppersmith says investors haven’t lost confidence in the artificial intelligence theme and are approaching AI with a barbell strategy.
“They want to own both the inputs into AI through the infrastructure plays. But they also want to own the outputs in the AI, which means the transport companies, the infrastructure that actually then leads to obviously productivity booms.”
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