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· Mega-cap tech stocks once again carry the market on their shoulders.
· Nvidia suffers the major blow from the rising geopolitical conflicts.
Last week, the big seven stocks climbed to an all-time high, as their concentration reached nearly 30% of the entire S&P 500 index.
However, excluding the „Magnificent Seven”, most stocks in the index look somewhat undervalued. The S&P 493 (Ex-the Mega 7) trades at a handle of 16x, below its 10-year average of 17x.
Regarding the „Big 7”, these large-cap U.S. tech stocks trade at considerably higher valuations than the other 493 stocks in the index. Many investors have piled into those high-flying big techs: Apple, Microsoft, Amazon, Google, Nvidia, Tesla and Meta.
To put it differently, for every dollar you invest in the S&P 500, almost 30 cents go to just seven stocks, and the remaining 70 cents go to the rest of the 493 other stocks.
So far this earnings season, stocks have seen a lot of downgrades. Fidelity forecasts Earnings Per Share (EPS) jumping 12% for the next two years, which looks ambitious. Should bond yields continue to climb to a 5-handle, levels not seen since 2007, there will be even more pressure for sky-flying tech stocks to correct. Not to mention that the high probability that we head into a recession scenario, which would be very negative for the bulls.
The rising trade war between the US and China will only add further headwinds for equities, on top of the escalating conflict in the Middle East. Those geopolitical risks could lead to high-tech valuations, correcting the downside as risk premiums increase.
One of the leading stocks, Nvidia, has seen its biggest drop this year as President Biden restricted AI chip sales to China. The goal is to limit China’s “access to advanced semiconductors that could fuel breakthroughs in AI.”
Nvidia substantially relies on China for the graphics processing units (GPUs), as the chipmaker generates over 22% of its sales from the 2 nd largest global economy.
Shareholders were stunned as the stock vaporized nearly $100 billion in Market Cap in just 24 hours after the announcement from Biden’s administration.
US commerce announced that the goal was to curb China’s access to advanced chips, which „could fuel breakthroughs in AI and sophisticated computers.”
GPUs have been a critical component for training AI models for tech, start-ups, and even governments.
Nvidia has been trending downward since September. If this trend continues and breaks critical support levels of 410 and 400, it has the potential to drag down the remaining big tech giants’ valuations and the entire S&P 500 index with them.
Investors could long the S&P 500 using our 3x US 500 , 5x Long US 500 , or short it using our -3x US 500 .
Alternatively, they could bet again the big tech using our -1x NVIDIA , -3x NVIDIA , -3x Apple , -3x Microsoft , -3x Amazon , -3x Alphabet , -2x Tesla , -3x Tesla .
Also, traders might continue riding the tech wave using our 2x NVIDIA , 3x NVIDIA , 2x Apple, 3x Apple , 3x Microsoft , 3x Amazon , 3x Alphabet , 2x Tesla , 3x Tesla.
Your capital is at risk if you invest. You could lose all your investment. Please see the full risk warning here.
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The ETP securities are intended for sophisticated investors who (i) are able to monitor their investment in the ETP securities on a frequent basis in line with the recommended holding period; (ii) understand the risk of compounded returns and the increased risk of investment in leveraged products; (iii) can afford to risk losing their investment; and (iv) and have a very short investment horizon in line with the recommended holding period. Please ensure that you fully understand the risks involved. If in any doubt, please seek independent financial advice. Investors should refer to the section entitled “Risk Factors” in the relevant prospectus for further details of these and other risks associated with an investment in the securities offered by the Issuer. This material is not intended to be relied upon as a forecast, research or investment advice and is not a recommendation, offer or solicitation to buy or sell any financial instrument or product or to adopt any investment strategy. Any decision to invest should be based on the information contained in the relevant base prospectus after seeking independent investment, tax and legal advice.
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Notice
If you are not classified as an institutional investor, you will be categorised as a private/retail investor. At this time, we cannot send communications directly to private/retail investors. You are welcome to view the contents of this website.
If you are an ‘Institutional investor’, you affirm either that you are a Per Se Professional Client, or that you wish to be treated as an Eligible Counterparty Client, both as defined under the Markets in Financial Instruments Directive, or an equivalent in a jurisdiction outside the European Economic Area.
Risk Warnings
The value of an investment in ETPs may go down as well as up and past performance is not a reliable indicator of future performance. Trading in ETPs may not be suitable for all types of investor as they carry a high degree of risk. You may lose all of your initial investment. Only speculate with money you can afford to lose. Changes in exchange rates may also cause your investment to go up or down in value. Tax laws may be subject to change. Please ensure that you fully understand the risks involved. If in any doubt, please seek independent financial advice. Investors should refer to the section entitled “Risk Factors” in the relevant prospectus for further details of these and other risks associated with an investment in the securities offered by the Issuer.
This website is provided for your general information only and does not constitute investment advice or an offer to sell or the solicitation of an offer to buy any investment.
Nothing on this website is advice on the merits of any product or investment, nothing constitutes investment, legal, tax or any other advice nor is it to be relied on in making an investment decision. Prospective investors should obtain independent investment advice and inform themselves as to applicable legal requirements, exchange control regulations and taxes in their jurisdiction.
This website complies with the regulatory requirements of the United Kingdom. There may be laws in your country of nationality or residence or in the country from which you access this website which restrict the extent to which the website may be made available to you.
United States Visitors
The information provided on this site is not directed to any United States person or any person in the United States, any state thereof, or any of its territories or possessions.
Persons accessing this website in the European Economic Area
Access to this site is restricted to Non-U.S. Persons outside the United States within the meaning of Regulation S under the U.S. Securities Act of 1933, as amended (the “Securities Act”). Each person accessing this site, by so doing, acknowledges that: (1) it is not a U.S. person (within the meaning of Regulation S under the Securities Act) and is located outside the U.S. (within the meaning of Regulation S under the Securities Act); and (2) any securities described herein (A) have not been and will not be registered under the Securities Act or with any securities regulatory authority of any state or other jurisdiction and (B) may not be offered, sold, pledged or otherwise transferred except to persons outside the U.S. in accordance with Regulation S under the Securities Act pursuant to the terms of such securities. None of the funds on this website are registered under the United States Investment Advisers Act of 1940, as amended (the “Advisers Act”).
Exclusion of Liability
Certain documents made available on the website have been prepared and issued by persons other than Leverage Shares Management Company. This includes any Prospectus document. Leverage Shares Management Company is not responsible in any way for the content of any such document. Except in those cases, the information on the website has been given in good faith and every effort has been made to ensure its accuracy. Nevertheless, Leverage Shares Management Company shall not be responsible for loss occasioned as a result of reliance placed on any part of the website and it makes no guarantee as to the accuracy of any information or content on the website. The description of any ETP Security referred to in this website is a general one. The terms and conditions applicable to investors will be set out in the Prospectus, available on the website and should be read prior to making any investment.
Leverage Investment
Leverage Shares exchange-traded products (ETPs) provide leveraged exposure and are only suitable for experienced investors with knowledge of the risks and potential benefits of leveraged investment strategies.
Cookies
Leverage Shares Management Company may collect data about your computer, including, where available, your IP address, operating system and browser type, for system administration and other similar purposes (click here for more information). These are statistical data about users’ browsing actions and patterns, and they do not identify any individual user of the website. This is achieved by the use of cookies. A cookie is a small file of letters and numbers that is put on your computer if you agree to accept it. By clicking ‘I agree’ below, you are consenting to the use of cookies as described here. These cookies allow you to be distinguished from other users of the website, which helps Leverage Shares Company provide you with a better experience when you browse the website and also allows the website to be improved from time to time. Please note that you can adjust your browser settings to delete or block cookies, but you may not be able to access parts of our website without them.
This website is maintained by Leverage Shares Management Company, which is a limited liability company and is incorporated in Ireland with registered offices at 2 Grand Canal Square, Grand Canal Harbour, Dublin 2.
By clicking you agree to the Terms and Conditions displayed.
