Popular Magnificent 7 ETF Falls 8.7% as Top Stocks Turn Into Bargains

The Roundhill Magnificent Seven ETF (CBOE: MAGS) stock has retreated by 8.7% from its highest point this year as most companies in the group dropped.

MAGS was trading at $65.10 from its all-time high of $71.10, while its year-to-date outflows hit $248 million.

MAGS stock chart | Source: TradingView Top Magnificent 7 Stocks Have Dropped This Year The MAGS ETF has pulled back this year as most Magnificent 7 stocks retreated.

Nvidia (NASDAQ: NVDA ), the biggest constituent, has dropped by 7.7% from its all-time high.

Meta Platforms (NASDAQ: META ) is in a technical bear market after falling 27% from its record high.

Microsoft (NASDAQ: MSFT ), another top holding in the fund, has dropped 38%, while Amazon (NASDAQ: AMZN ) and Tesla (NASDAQ: TSLA ) have declined by 13% and 21%, respectively.

Top Magnificent stocks have retreated for diverse reasons.

Meta, Microsoft, and Amazon have fallen as soaring chip, server, and memory prices have pushed their capital expenditures to record highs.

Investors are increasingly concerned about this capex and the return on investment.

Nvidia, on the other hand, has dropped as investors have turned their focus on memory stocks like Micron and SanDisk.

Tesla remains under pressure after the management warned of rising costs that will impact its profitability this year.

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This likely explains why investors have started to buy the fund, with its weekly inflows rising by over $255 million, its highest level since April.

Nvidia, despite its strong growth and market share in the GPU space, trades at a forward P/E multiple of 21, lower than its five-year average of 43.

It is also cheaper than the technology sector median of 25.

The average NVDA stock forecast is $309, higher than the current $194.

Microsoft also trades at a forward P/E ratio of 23, lower than its five-year average of 31.

The consensus target for the stock is $569, up by 45% from the current level.

Amazon, on the other hand, trades at a forward PE ratio of 27, also lower than the five-year average of 161.

Meta’s forward multiple of 17 is also lower than its average of 23.

Most analysts are still bullish on companies in the Magnificent 7 companies, pointing to their large market shares, substantial revenue growth, and their profit metrics.

Still, Tesla is the most expensive company in the group, trading with a forward P/E ratio of 185, much higher than most companies.

Its premium valuation is happening despite its slowing growth and competition pressure from companies like Nio and Rivian.

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