Tech Titans on Sale: Why NYU Expert Advises Buying ‘Magnificent Seven’ During Market Dips
Staff Editor Top Finance Professor Advises Buying Tech Giants During Market Corrections
Aswath Damodaran, a prominent finance professor at New York University, is urging investors to consider purchasing shares of leading technology companies during market downturns. The professor’s advice comes as he warns that the market may be overlooking potential global risks in the coming year.
Damodaran specifically points to the “Magnificent Seven” stocks, which include industry giants such as Amazon, Meta, and Tesla, as prime targets for investment during periods of market correction. These companies have been instrumental in driving the S&P 500 to record highs, accounting for approximately one-third of the benchmark index’s value.
However, this concentration has raised concerns about market vulnerability. Damodaran suggests that current stock prices are being driven more by mood and momentum than fundamental factors. He predicts a significant market shift by 2025, citing historical patterns of global events occurring every two to three years.
Despite these potential risks, Damodaran views market corrections as opportunities for investors to increase their exposure to leading tech stocks. He emphasizes the profitability and economic impact of these companies, recommending that investors consider adding one or more to their portfolios during downturns.
This stance marks a notable shift in Damodaran’s perspective on tech stocks. Previously, he had sold his Nvidia shares in mid-2023. However, Nvidia has since experienced substantial profit growth, particularly in the artificial intelligence sector.
Damodaran highlights the unique position of each of the Magnificent Seven companies, citing their revenue growth and advancements in AI technology. He notes their exceptional cash generation capabilities, which he believes will persist in the future.
As the market continues to evolve, investors are advised to remain vigilant and consider Damodaran’s insights when formulating their investment strategies, particularly during periods of market volatility.
