As recession fears grow due to a softer jobs report, major Wall Street banks are calling for the U.S. Federal Reserve to lower its key interest rate by up to 50 basis points in September. This potential rate cut could impact the Magnificent 7 stocks, leading to revisions in forecasts and expectations by financial institutions.
Citi’s analysis suggests a dovish stance by the Federal Reserve, with the possibility of multiple 25 basis points cuts at each meeting, and the potential for more aggressive 50 basis points cuts if economic indicators worsen rapidly. Bank of America and Evercore ISI have adjusted their forecasts accordingly, anticipating rate cuts in September and December, with a revised terminal rate prediction.
Microsoft Corporation, one of the Magnificent 7 stocks, has been highlighted for its strong presence in the Generative AI sector. A recent survey of Chief Information Officers (CIOs) indicated Microsoft’s leadership in Generative AI, leading to market share gains. The company’s core spending growth expectations have risen, driven by its Generative AI capabilities and Azure Cloud platform.
Amazon, a global e-commerce and cloud computing giant, reported solid earnings for the quarter but saw a decline in its stock due to lower-than-expected third-quarter revenue projections. Despite this, Wall Street analysts remain optimistic about Amazon’s performance, with a focus on AWS growth and retail margin expansion.
Nvidia Corporation, a pioneer in GPUs and AI, remains on track to reach a market capitalization of $4 trillion. The company’s leading role in supplying AI chipsets positions it well in the generative AI market, which is projected to grow significantly in the coming years.
These developments highlight the ongoing impact of economic factors on the tech industry and the strategies being employed by major companies in response to market conditions. Investors and analysts will be closely monitoring these trends and their implications for the Magnificent 7 stocks as the tech selloff intensifies.
