Content and data provided by various third parties and Fidelity − Terms of Use | Help/Glossary
Research > ETFs > ETF / ETP Commentary > 

Risk Repricing Could Lead to Magnificent Seven Opportunity

BY | ETF Database
5:19 am ET 04/21/25 | 60 VIEWS
Domestic growth stocks have experienced 2025 headwinds. Those equities include the Magnificent Seven. These headwinds largely stem from the off-and-on tariff policy laid out by the Trump Administration.While that’s been an obvious drag ETFs such as the Invesco QQQ Trust (QQQ B+) and the Invesco NASDAQ 100 ETF (QQQM B), there are some silver linings. Those include that the risk-induced repricing experienced by previously glamorous mega-cap growth equities, including QQQ/QQQM holdings, could represent opportunity. That’s pertinent because the Magnificent Seven combine for more than 40% of the QQQ/QQQM rosters. Indeed, the setbacks endured by those stocks are understandable. As J.P. Morgan Asset Management points out, 75% of Magnificent components suppliers are located overseas. Many are in countries that are on the White House tariff list. Not only that, but QQQ/QQQM holdings such as Alphabet (GOOGL), Apple (AAPL), and Microsoft (MSFT) rely on ex-US markets for more than half their sales.Inklings of Hope for Mag 7, QQQQQQ is down 10.38% YTD, and some of its marquee holdings are sporting worse 2025 losses than that. So it’s understandable market participants are leery of venturing into mega-cap growth at the moment. However, it pays to see the forest through the trees. That’s because the magnificent seven aren’t fundamentally damaged. But they are attractively valued relative to recent history. “So far, the pullback hasn’t been triggered by collapsing fundamentals, but a repricing of risk. Investors are reassessing margins, capex and earnings potential in a more uncertain [environment. And] valuation compression has followed,” noted J.P. Morgan’s Stephanie Aliaga. “The forward P/E ratio for the Mag 7 has declined to ~22x from 31x at the start of the [year. That marks] the cheapest levels since January 2023—before the AI investment theme even gained traction.” Over the near term, investors considering getting back into the Magnificent game or adding to positions in those stocks or ETFs like QQQ and QQQM may need to reconcile that trade issues are likely to persist over the coming months. Obviously, tariffs cannot be ignored. But neither can the point that the Magnificent Seven and related companies – plenty of which also dot the QQQ/QQQM portfolios – are innovation drivers. Plus, compelling fundamentals continue underpinning the AI thesis. “The mega-cap tech companies remain at the forefront of [innovation. But] they are not a monolith and remain highly exposed to global policy shocks,” concluded Aliaga. “For investors, the playbook isn’t to abandon the cohort, but to manage your exposure, protect portfolios against downside risk and keep an eye on where leadership is headed [next. As] beyond the trade headlines, AI advancement is rapidly progressing.” For more news, information, and analysis, visit the ETF Education Channel.

More Commentary

Appetite for Gold in China Continues Amid Jittery Markets
BY | ETF Database
7:11 am ET 04/21/25 | 21 VIEWS
High-Yield Prospects: April 16 Edition
BY | ETF Database
04/17/2025 | 186 VIEWS
Are These ETFs Cheap Yet? Crypto, Cannabis, Chips
BY | ETF Database
04/17/2025 | 154 VIEWS
View more Commentary

Search Commentary

Enter Keyword(s)
Filter Results

Performance data shown is past performance and is no guarantee of future results. Current performance may be higher or lower than the performance data quoted. Yield and return will vary, therefore you have a gain or loss when you sell your shares. For standard quarterly performance, go to the fund's Snapshot page by clicking on the ETF/ETP's symbol.

ETFs may trade at a premium or discount to their NAV and are subject to the market fluctuations of their underlying investments.

For iShares ETFs, Fidelity receives compensation from the ETF sponsor and/or its affiliates in connection with an exclusive long-term marketing program that includes promotion of iShares ETFs and inclusion of iShares funds in certain FBS platforms and investment programs. Please note, this security will not be marginable for 30 days from the settlement date, at which time it will automatically become eligible for margin collateral. Additional information about the sources, amounts, and terms of compensation can be found in the ETF's prospectus and related documents. Fidelity may add or waive commissions on ETFs without prior notice. BlackRock and iShares are registered trademarks of BlackRock, Inc. and its affiliates.

FBS receives compensation from the fund's advisor or its affiliates in connection with a marketing program that includes the promotion of this security and other ETFs to customers ("Marketing Program"). The Marketing Program creates incentives for FBS to encourage the purchase of certain ETFs. Additional information about the sources, amounts, and terms of compensation is in the ETF's prospectus and related documents. Please note that this security will not be marginable for 30 days from the settlement date, at which time it will automatically become eligible for margin collateral.

News, commentary (including "Related Symbols") and events are from third-party sources unaffiliated with Fidelity. Fidelity does not endorse or adopt their content. Fidelity makes no guarantees that information supplied is accurate, complete, or timely, and does not provide any warranties regarding results obtained from their use.

Any data, charts and other information provided on this page are intended to help self-directed investors evaluate exchange traded products (ETPs), including, but limited to exchange traded funds (ETFs) and exchange traded notes (ETNs). Criteria and inputs entered, including the choice to make ETP comparisons, are at the sole discretion of the user and are solely for the convenience of the user. Analyst opinions, ratings and reports are provided by third-parties unaffiliated with Fidelity. All information supplied or obtained from this page is for informational purposes only and should not be considered investment advice or guidance, an offer of or a solicitation of an offer to buy or sell a particular security, or a recommendation or endorsement by Fidelity of any security or investment strategy. Fidelity does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating ETPs. Fidelity makes no guarantees that information supplied is accurate, complete, or timely, and does not provide any warranties regarding results obtained from their use. Determine which securities are right for you based on your investment objectives, risk tolerance, financial situation and other individual factors and re-evaluate them on a periodic basis.

Before investing in any exchange traded product, you should consider its investment objective, risks, charges and expenses. Contact Fidelity for a prospectus, offering circular or, if available, a summary prospectus containing this information. Read it carefully.