Analysts have underestimated this bull market at every turn, Alpine Macro strategists said in a recent note. Despite widespread skepticism, the global investment firm believes equities are poised to continue surpassing expectations, driven by broadening earnings growth and a resilient economy.is trading higher than the top price targets set by Wall Street strategists heading into 2024.
In addition, mega tech companies have emerged as an idiosyncratic block, less vulnerable to macro influences, allowing the broader large-cap U.S. equity index to power ahead. “Their asset-lite characteristics also make them more immune to interest-rate policy,” the firm noted. Historical trends suggest profit margins bounce back soon after major cycle troughs, hinting at more upside to come.
They illustrate the trajectory of the S&P 500 if the rest of the market experienced the same degree of expansion as the Magnificent 7 since 2023. If this catch-up were to occur, the implied value of the S&P 500 would be closer to 6,500 rather than its current level.Their fair-value valuation model, which incorporates a variety of fundamental and cross-asset inputs, suggests a fair-value price-to-earnings multiple of 20x.