'Mag 7' stocks starting to compete against each other, says Ed Yardeni

Core Viewpoint - The current tech valuations are argued to be in a different paradigm compared to historical valuations, with a higher ceiling and floor for valuations, although this argument is often met with skepticism [2][3]. Valuation Comparisons - The S&P 500 forward PE is currently below 30, contrasting with the tech bubble in 1999 when multiples reached 50, indicating that the market is not in bubble territory like it was back then [3][4]. - There is less seller financing today compared to 1999, and companies are not facing the same technological upgrade pressures as they did at the turn of the millennium [4]. Market Dynamics - The "Magnificent 7" tech companies are starting to compete aggressively against each other, leading to a recommendation to underweight these stocks and consider other tech areas, as well as to overweight financials and industrials [5][11]. - Valuation multiples are decreasing due to increased competition among the Magnificent 7, which is likened to a "Game of Thrones" scenario where competition is driving margins down [9][10]. Future Growth Uncertainties - There are growing uncertainties regarding the future growth rates of the Magnificent 7 as they compete in the AI space, leading to questions about the return on capital spending [11][12]. - Despite the uncertainties, the market remains in a bull phase, but there is a trend of investors lightening their positions in the Magnificent 7 and reallocating funds to financials, industrials, and healthcare [12][13].