Suzuki also noted that the top 10 stocks in the S&P 500 now account for over 30% of the index's total market cap, the largest share in over 40 years, indicating extreme investor concentration in mega-cap tech firms. He suggested that these firms risk underperforming, which could cause investors to shift to other areas of the market. RBA expects the "Magnificent Seven" stocks could lose 20%-25% of their value over the next decade, while small-caps in the Russell 2000 could gain about the same amount.
Key takeaways:
- Richard Bernstein Advisors (RBA) predicts a once-in-a-generation investment opportunity is approaching, with expectations of anemic big tech earnings over the next year.
- The tech bubble bursting could lead to gains in other areas of the market as leadership evens out.
- Of the Magnificent Seven tech stocks - Apple, Microsoft, Alphabet, Amazon, Nvidia, Tesla, and Meta Platforms - only three are expected to have more than 25% earnings growth in 2024.
- RBA expects the extreme valuations of tech stocks to pull back, potentially wiping out 20%-25% of their value over the next decade, while other areas of the market, such as small-caps, could see significant gains.