Big Tech stocks might still be the market's best value even after the Magnificent 7's rally

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Earnings growth and the possibility of an economic downturn help justify high valuations for major tech stocks, according to some Wall Street strategists.

The dominance of the largest technology stocks, deemed the " Magnificent 7 ," in this Wall Street rally has led to worries about valuations and drawn more than one comparison to the tech bubble of 1999. But a closer look at those companies — ranging from Amazon to Microsoft to Nvidia — can also lead to another, possibly unexpected, conclusion: they may actually be the strongest part of the market, especially if the economy cools.

While the S & P 500 rose to a new high on Wednesday after the March update from the Federal Reserve, it was the small cap Russell 2000 that saw the bigger gain for the day, jumping nearly 2%. Optimistic strategists, like Fundstrat's Tom Lee , see the market rally continuing to broaden.

 

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