Tech investor Dan Niles is the least excited about the group of Magnificent Seven stocks than he’s been in years, citing lofty valuations and slowing growth in the mega-cap tech leaders that’s 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 mega-cap leaders cede leadership to the broader market. In particular, he said he prefers value stocks, as well as small- and mid-cap names that have attractive valuations, and can benefit from the deregulatory policies promised by the president-elect. “I also think mega cap 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 Mag Seven, saying that expanding profit margins will boost the business in the future.
