Retail traders have been observed to be selling off their shares in the 'Magnificent Seven' tech stocks, with a noticeable shift towards pharmaceutical stocks, according to a recent report by JPMorgan.
What Happened: Retail traders have been net sellers of the majority of the 'Magnificent Seven' stocks, with a focus on pharmaceuticals like Eli Lilly And Co
Over the past week, individual traders have sold off $1.4 billion worth of individual stocks, including major players like Tesla Inc
However, NVIDIA Corp
Despite the ongoing AI-driven frenzy, there are signs of it cooling off. Goldman Sachs reported in late February that hedge funds were selling tech stocks at the fastest pace in seven months, following a six-week buying streak leading up to Nvidia's quarterly earnings.
Why It Matters: The shift in retail trader focus from tech to pharma stocks is indicative of a broader trend in the market. This development comes on the heels of concerns raised by Wall Street veteran Ed Yardeni about the vulnerability of some of the Magnificent Seven stocks, including Tesla and Apple.
Meanwhile, the era of the Magnificent Seven, a term popularized by analyst Mike O'Rourke, is reportedly coming to an end as the fortunes of these tech giants have diverged sharply in recent months.
Amidst these shifts, the AI-driven frenzy has also been a cause for concern, with Apollo Global Management chief economist Torsten Sløk warning that the current AI bubble is bigger than the 1990s tech bubble.
