Mag 7 and software could boost portfolio in second half: ETF Action
Overlooked market areas may have a banner in the second half of the year.
ETF Action co-founder Mike Akins is encouraging investors to increase interest in groups that are underperforming compared to major AI stocks.
He told “ETF Edge” this week that his list includes software and cloud computing names. Many have fallen from “bleeding valuations” and have “very strong growth scenarios”.
“These companies prove that ‘yes,’ we still need software to do our daily jobs,” Akins said.
He also notes that disruptive technology is a strong buy for the next six months.
“This is a thematic strategy,” Akins said. “It plays a little lower towards the middle of the market [and] small cover gap. These names are a little behind mega cover, semiconductor-led market…. When you look at analysts’ earnings growth estimates, they can be quite successful. It’s just a pretty rosy setup.”
Akins, who was head of exchange-traded funds at ALPS before co-founding the independent financial technology and research firm, also highlights opportunities among underperformers.“The Magnificent Seven” directoryconsists of Nvidia, Microsoft, Alphabet, Amazon, Meta, Apple And Tesla’s.
“WHO [would have] I thought Mag 7 would hold steady halfway through the start of the year,” said Akins, who sees the group as a solid catch-up trade for the second half of the year.
The Magnificent Seven underperformed Nasdaq-100 It fell more than 2% in the first half of the year, while the Nasdaq-100 rose almost 20%.
The momentum may already be starting to materialize. While the Magnificent Seven index rose 5% in the first trading days of the second half of the year, the Nasdaq-100 fell 1% as of Friday’s close.
Additionally, Akins expects small and medium-sized companies to be seen as vantage points entering 2027, noting that small-sized companies in particular have performed incredibly well this year.
“All the names in the market are really starting to catch up,” he said. “I think you can see that continuing throughout the year, not just with rising earnings. [and] increased income is also due to the expansion of floors [have been] “I’ve been extremely depressed for the last few years.”
So far this year, Russell 2000 indexStocks tracking small-cap stocks rose nearly 20%, while broader S&P 500 increased by almost 11%.
