How I’m Trading the “Underappreciated 493”
Earlier this week, I wrote about the “underappreciated 493” and Ed Yardeni’s thesis that the Mag 7 run could be over.
The Mag 7 includes big tech groups like Nvidia and Alphabet (GOOGL), which make up 35-37% of the total S&P 500 market value.
Because the S&P 500 is market-cap weighted, those seven companies hold outsized influence.
The truth is… a 35-37% concentration is a balance problem.
Earnings growth can’t keep scaling forever,
Which is why I’m tilting toward non-tech sectors as the next wave of productivity and profit growth.
Non-Tech Companies are Becoming Tech Companies
The core takeaway I took from Ed Yardeni’s thesis is this…
Non-tech companies are becoming tech companies not because they want to – they HAVE to.
AI, automation, data, cloud, robotics – these are no longer perks for a non-tech group. They’re now foundational infrastructure.
This is why the “underappreciated 493” argument is so strong.
Imagine these 493 companies adopting AI.
How much faster could they grow?
Here are a few real-time examples…
John Deere now makes AI-enabled autonomous tractors.
Ford and General Motors run giant software and data platforms inside the car.
That’s just the industrial sector.
The health sector is also targeting growth from AI with facilities like hospitals and big pharma companies shifting from manual diagnosis to AI-assisted diagnosis.
Energy companies are deploying AI to balance the grid.
There’s also the finance sector, with banks quietly becoming the biggest tech spenders on earth. In fact, JP Morgan literally calls itself “a technology company with a banking license.”
So as these other sectors start to infuse AI into their services, there could be a “catch-up” process where the underappreciated 493 become a bigger part of the S&P 500.
YOUR ACTION PLAN
I recently recommended one of the “493 underappreciated” stocks for a trade in Catalyst Cashouts yesterday.
It recently added ChatGPT to its service.
Its chart has also been moving up the last couple days.
