Tech investor Dan Niles is the least excited about the group of ” Magnificent Seven ” stocks than he has been in years, citing lofty valuations and slowing growth in the megacap tech leaders that is turning him instead to look at a broader-based basket of stocks. “We’ve had a Mag Seven stock in our top five picks which we put out for the last several years,” Niles told CNBC’s ” Money Movers ” on Friday. “This is the first year where I’m debating whether I have none because a lot of these big things that have driven growth, it’s starting to slow down. AI spending, it’s going to slow down.” The founder of Niles Investment Management expects the underperformance in the Magnificent Seven stocks in the second half of this year will continue in 2025, as the megacap leaders cede leadership to the broader market. In particular, he said he prefers value stocks, as well as small-cap and midcap names that have attractive valuations, and can benefit from the deregulatory policies promised by President-elect Donald Trump. “I also think megacap growth is going to start to slow down next year, and you’re going to have an AI digestion phase next year — as Capex flows from 50 to 60% growth, to maybe 10% to 20% — and that could hurt a lot of the AI-oriented names sitting inside tech,” Niles added. Niles said Amazon is the one name he still likes in the Magnificent Seven, saying expanding profit margins will boost the business in the future.
