Tech-driven rally built on “strong foundation”

Published on29 FEB 2024

The incredible US tech rally is built on sustainable and enduring fundamentals, according to Peter Callahan, a sector specialist within Goldman Sachs Global Banking & Markets.

The Magnificent Seven have been a huge part of the S&P 500’s recent rally. Since the start of 2023, these stocks are up about 90%, while the other 493 stocks are up just 18%.

At this point, “it’s natural to wonder if these stocks are overvalued,” Callahan acknowledges. “Some investors even hear echoes of the dotcom bubble.”

But he sees it differently. “These seven stocks are capitalizing on one of the most exciting technologies in history: The rise of generative AI.”

While AI has boosted investor sentiment, it has also translated into real revenue and earnings growth. For the fourth quarter, the Magnificent Seven reported revenues that rose 15% year-over-year, and annual sales growth of 12% is expected through 2026.

“This rally has been built on a strong foundation,” Callahan says. “And I expect it to continue.”

Explore More Insights