Yardeni Breaks Tech Overweight Tradition with Defensive Shift Amid Valuation Warnings

The explosive growth of the Magnificent 7 tech stocks has run into headwinds as competitive pressures begin to erode their profit margins, according to Yardeni Research. , these giants now face valuation pressures that have led analysts to shift away from the sector.

Intensifying competition is forcing tech leaders to slash prices and increase spending on innovation, squeezing their bottom lines. This margin compression becomes especially concerning when compared to non-tech sectors. Financials and industrials have demonstrated stronger productivity-adjusted returns, making them more attractive in a diversified portfolio.