Goldman: Recommends investors shift money to other tech companies beyond the "Big Seven"

David Kostin, Goldman's chief U.S. equity strategist, noted that the "Magnificent Seven" tech giants all failed to achieve positive earnings growth in this earnings season, the first time since 2022. He suggested investors shift their money to other tech companies, especially those involved in the AI field. Kostin expects these large tech stocks, including Microsoft and Apple, to decline this year and noted that the excess return growth of the "Magnificent Seven" would narrow from 32 percentage points in 2024 to 6 percentage points in 2025. However, it's worth noting that Nvidia has not yet released its fourth-quarter 2024 earnings, which will be released on February 26 and is highly anticipated by the market. Kostin suggested investors focus on companies he called the "AI third stage," which mainly commercialize and incrementally increase revenue through software and IT services. The "AI second stage" companies involve microchip development, cloud services, security software, data center investments, and hardware. Kostin recommended AI stocks outside the "Magnificent Seven" including Datadog, MongoDB, and Snowflake. If investors insist on investing in the "Magnificent Seven," Goldman is bullish on Microsoft and its position in AI.