{"id":4652,"date":"2026-07-09T10:45:05","date_gmt":"2026-07-09T10:45:05","guid":{"rendered":"https:\/\/horizonindexadvisors.com\/index.php\/2026\/07\/09\/magnificent-7-stocks-are-now-at-their-cheapest-in-about-10-years\/"},"modified":"2026-07-09T10:45:05","modified_gmt":"2026-07-09T10:45:05","slug":"magnificent-7-stocks-are-now-at-their-cheapest-in-about-10-years","status":"publish","type":"post","link":"https:\/\/horizonindexadvisors.com\/index.php\/2026\/07\/09\/magnificent-7-stocks-are-now-at-their-cheapest-in-about-10-years\/","title":{"rendered":"Magnificent 7 stocks are now at their cheapest in about 10 years"},"content":{"rendered":"
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Magnificent 7 stocks that previously dominated equity markets are currently trading at their lowest valuation premiums in a decade.<\/p>\n

Following a challenging period where capital rapidly rotated toward hardware and semiconductor companies, the Magnificent 7 cohort presents an \u201cincreasingly attractive entry point\u201d for targeted capital deployment.<\/p>\n

This stark valuation compression<\/a> stems directly from rising debt issuance and mounting investor skepticism regarding immediate returns on artificial intelligence investments.<\/p>\n

Morgan Stanley Wealth Management sees these tech giants as significantly \u201cunderpriced\u201d relative to their underlying financial metrics.<\/p>\n

Consequently, the firm\u2019s strategists advocate fading semiconductor exposure to execute a strategic rotation back into specific hyperscalers.<\/p>\n

Magnificent 7 stocks have underperformed in 2026<\/h2>\n

While the benchmark S&P 500 index has delivered a 9.0% return year-to-date, the Roundhill Mag 7 ETF has experienced a slight decline.<\/p>\n

Conversely, the iShares Semiconductor ETF has soared roughly 85% during the identical period \u2013 reflecting an aggressive capital rotation toward the direct beneficiaries of the artificial intelligence buildout, rather than the corporate entities funding the infrastructure.<\/p>\n

As these megacap tech names issued substantial debt to finance their computational hardware build-outs, equity markets discounted their shares due to yet-to-be-proven returns on investment.<\/p>\n

According to Morgan Stanley, this compressed the \u201cvaluation premium\u201d of the Magnificent 7 over the remaining S&P 500 stocks to just 10%, marking the lowest divergence in more than ten years.<\/p>\n

Why Morgan Stanley recommends owning Mag 7 stocks<\/h2>\n

Amidst this structural market divergence, Morgan Stanley notes the broader Magnificent 7 cohort continues to boast a 45% annual earnings growth advantage over benchmark stocks.<\/p>\n

Lisa Shalett, head of the global investment office at Morgan Stanley Wealth Management, asserts that hyperscalers currently appear deeply undervalued.<\/p>\n

This bullish posture is anchored by an expected enterprise transition away from \u201ctokenmaxxing<\/a>\u201d, a resource-heavy model measuring AI adoption strictly through corporate token consumption.<\/p>\n

But aggressive energy requirements and steep financial costs have rendered the model increasingly undesirable for businesses.<\/p>\n

The resulting shift toward hybrid designs for AI workflows stands to \u201cdisproportionately benefit\u201d major cloud infrastructure operators, specifically Alphabet, Amazon, and Microsoft.<\/p>\n

How Morgan Stanley recommends playing Mag 7 stocks<\/h2>\n

Rather than advocating for passive index exposure, experts at Morgan Stanley recommend hand-picking tech mega-caps in the back half of 2026. \u00a0<\/p>\n

\u201cWe are stock-pickers within the group, focusing on those with dynamic design approaches and custom ASIC racks linked to dominant cloud service businesses.\u201d<\/p>\n

Historical valuation comparisons reinforce the narrative that Magnificent 7 stocks are trading at an unusual discount at the time of writing.<\/p>\n

Nvidia, for example, is going for about 18x forward earnings currently, versus its historical average of about 36x. <\/p>\n

This is why Morgan Stanley\u2019s Wall Street peers also remain constructive on the Mag 7 names for the next 12 months.<\/p>\n

The post Magnificent 7 stocks are now at their cheapest in about 10 years<\/a> appeared first on Invezz<\/a><\/p>\n

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