From Morningstar:

Markets have been soaring on the back of strong earnings, especially among the Magnificent Seven tech stocks like Nvidia and Microsoft. BlackRock strategist Wei Li is confident in the market’s trajectory, despite concerns about the rally being too narrow. Earnings are driving the rally, not a broader market boost.

Wei Li believes that the concentration of market gains in a few key stocks is not a problem, as long as earnings remain strong. The Magnificent Seven tech stocks have seen impressive earnings growth, with Nvidia’s earnings per share up 765% from last year. Strong earnings are driving market confidence in the face of inflation and interest rate uncertainties.

The current market rally, led by big tech stocks like Nvidia and Microsoft, is different from the dot-com bubble of the early 2000s. Analysts believe that AI stocks are rising in line with earnings expectations, unlike the speculative bubble of the past. BlackRock is optimistic about future tech sector earnings and innovation.

Wei Li warns that inflation could pose a threat to the market rally if not managed properly. She emphasizes the importance of monitoring margins and earnings reports for signs of weakness. While she believes inflation may ease in the coming months, unexpected fluctuations could impact market sentiment and earnings growth.



Read more at Morningstar: BlackRock: Why The Magnificent Seven Stock Rally…