Morgan Stanley: Tech Giants Will Struggle to Dominate the Stock Market by 2025

The technology giants responsible for more than half of the S&P 500 Index's 23% jump last year appear to be struggling to maintain market dominance in 2025 as earnings growth slows down. Lisa Shalett, Chief Investment Officer of Morgan Stanley’s wealth management division, mentioned in an interview with Bloomberg Television that the slowing profits could "surprise some fanatics who are betting on these very high double-digit earnings numbers." She added, "The idea that they can trade together as a group and lead the market might be shaken in 2025."

According to data compiled by Bloomberg Intelligence, the "Magnificent Seven" stocks—Alphabet Inc., Amazon.com Inc., Apple Inc., Meta Platforms Inc., Microsoft Corp., Nvidia Corp., and Tesla Inc.—are expected to see an 18% increase this year, ahead of a projected 34% earnings growth for 2024.

Shalett anticipates that investors will become more selective in purchasing mega-cap technology stocks in 2025, starting to differentiate between winners. She stated, "We are reaching a point where the distinctions in individual company risks will really make a difference." Shalett noted, "Are we talking about different exposures to the AI growth story, exposure to antitrust risks, or the recently very strong dollar exposure?"