HSBC Bullish on AI Stocks Rotation

🔑 Key Takeaways

• •HSBC's Max Kettner argues that recent market selloffs in big tech have been overdone, with the Magnificent Seven stocks now generating a combined return on equity of 65% compared to just 15% in 2017-2018, indicating strong underlying profitability[1][3]
• •Amazon is trading near its lowest price-to-earnings ratio in 20 years, while the Magnificent Seven trade at approximately 26 times earnings—nearly identical to the Russell 2000 at roughly 25 times despite nearly half of Russell 2000 companies having negative earnings[3]
• •HSBC recommends rotating back into Magnificent Seven stocks while adding exposure to homebuilders, regional banks, transportation ETFs, and retail funds, anticipating benefits from expected tax refunds and underestimated consumer strength[3]

🔮 Future ImplicationsAI analysis grounded in cited sources

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