Tech Giants Diverge as Scrutiny Rises on Valuations

The "Magnificent Seven" tech stocks diverged in October performance as earnings affected valuations. Amazon and Microsoft rose, while Alphabet, Nvidia, and Tesla fell.

Scrutiny has increased on tech valuations and AI promises amid a shifting market backdrop. Investors are debating if the Magnificent Seven are overvalued.

The Seven still account for 30% of the S&P 500, so their performance greatly impacts the index. Their declines have contributed to the S&P 500 dropping since summer highs.

Signs of market rally broadening beyond the Seven remain lacking. Areas like small caps and financials continue to lag despite some better earnings.

As the Seven's tide recedes, it reveals which sectors lack support. The question becomes which can regroup after riding the rally without firm fundamentals.