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      "text": "Elevated valuations, rather than slowing growth, is the most common pushback on the group that we hear from investors.",
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      "text": "Forward P/E multiple: 30x",
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      "text": "Elevated valuations, rather than slowing growth, is the most common pushback on the group that we hear from investors. In aggregate, the Magnificent 7 currently trade at a forward P/E multiple of 30x compared with 20x for the overall index.",
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      "text": "Roughly 40% of S&P 500 market cap has reported 4Q earnings, including six of the Magnificent 7 stocks. Mega cap tech broadly beat consensus 4Q revenue estimates with an average positive surprise of 1.3%.",
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      "text": "Looking forward, we expect revenue growth will be the key driver of returns for the Magnificent 7 stocks.",
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      "text": "If consensus estimates are realized, superior sales growth will likely lead the Magnificent 7 to outperform the S&P 493 during 2024.",
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      "text": "The FOMC this week maintained the fed funds rate at 5.25%-5.5%, as expected, but Chair Powell surprised investors by intimating that the first rate cut will not occur until May, rather than March as the market had anticipated.",
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      "text": "Improving fundamentals, rather than valuation expansion, have driven the bulk of the group's performance since 2019 (Exhibit 4).",
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      "text": "The quality attributes of the Magnificent 7 have played an especially important role in the last two years by largely insulating them from the impact of rising rates.",
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      "text": "Importantly, the Tech Bubble shows that investors believe consensus estimates at their own risk (Exhibit 9).",
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      "text": "However, there is a wide dispersion of consensus growth estimates across the group. NVDA is expected to grow sales during the next three years at a blistering 31% annual pace compared with just 6% for AAPL.",
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      "text": "The forward path of the Magnificent 7 is one of the most common client questions we receive. The group has outperformed YTD by 534 bp, returning 7.9% vs. 2.6% for the remaining 493 stocks.",
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      "text": "Our valuation model indicates that the group's fast expected growth and high quality attributes largely explain their premium valuation (Exhibit 8).",
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      "text": "Conversations we are having with clients: Prospects for the largest US tech stocks",
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