Buy Mega Cap Tech Stocks

Trade headlines continue to dominate the macro. Uncertainty has investors clinging to safety.

Investor sentiment crashed.

We’ve been recommending more tariff proof stocks. They’ve proven why they belong in every portfolio.

But stock market carnage is creating quality opportunities in beaten down growth areas.

It’s time to buy mega cap tech stocks.

Before we jump into these technology stalwarts, it’s important to step back and learn historical facts about bull and bear markets. Short-lived pain often turns to gain.

Couple this with a unique signal study firing in the volatility and credit markets, and you’ve got a recipe for higher stock prices.

Just lean into the highest quality fast growers… the Mag 7. They’ve been hammered 50% harder than the S&P 500 despite much more resilient earnings.

That’s creating some juicy deals.  

Odds are they won’t last long.

Bull Markets Dwarf Bear Markets

There’s no sugar coating it. Bear markets are brutal.

Since 1937, S&P 500 bear markets have averaged 29% declines lasting nine excruciating months.

Here’s the good news: Bull markets dwarf bear markets, averaging huge 133% gains over 3.8 years (table).

The take-away is simple. Dips turn into monster rips:

Historically, once you’ve entered a bear market, you’ve only been down once three years later (chart).

It could happen again, but it’s the exception, not the rule. Mostly, you get paid not to react, or better yet … to buy the dip.

With this historical guide, buy high-quality cyclical stocks on the big down days. The evidence proves it’ll pay off.

Now let’s pivot to an interesting signal study in the credit and derivatives markets. There’s reason to believe this latest bear represents a prime opportunity for the bold.

Calm Credit Markets Bode Well for Stocks

How much upside can we expect?

Great question. Here’s an interesting signal that few are discussing.

Usually, credit markets crack before equities. That hasn’t been the case in 2025.

If you compare equity stress (VIX Index) to credit stress (high yield spreads), you’ll find something interesting: We’ve experienced a much bigger panic in equities relative to credit (chart).

Historically this kind of imbalance hasn’t happened during durable recessions.

Every time we’ve seen an extreme equity panic relative to a more muted credit market reaction, the S&P 500 has been higher a year later (chart).

This isn’t a short-term indicator. But for long-term investors, it’s a smart signal.

Buy Mega Cap Tech Stocks

We’ve made the macro case on why investors should buy dips. Now, let’s tackle portfolio construction.

Regular readers know we’ve been recommending buying selectively with a margin of safety lately.

More “tariff proof” counter-cyclical sectors, domestic leaning names and companies with strong pricing power and high margins have outperformed since late February.

Meanwhile, big tech has been sold aggressively.

The Magnificent 7 suffered a huge 33% peak to trough decline. That’s 50% more than the S&P’s 21% drawdown.

That’s created a magnificent opportunity.

While they definitely have some tariff exposure, the tech giants’ dominant industry positions and robust balance sheets leave them better able to withstand economic weakness than most other companies.

The proof is in the earnings…

Check this out:

The Mag 7’s 12-month forward earnings expectations have been revised higher by 14.7% YTD.

Contrast this with just 5% for the S&P 500 and a measly 0.5% for the S&P 500 Equal Weight Index, which massively underweights big tech (chart).

Consensus sees a similar trend for CY 2025 with the Mag 7 forecasted to grow EPS 15% vs. only 8% for the S&P 493.

Meanwhile, mega cap tech valuations have been marked down far more than the overall market, falling from a peak 12MF PE of 36 in February to only 25.6 today (chart):

There’s a simple playbook here.

First, don’t be fearful in a bear market.

Second, outsized equity stress vs credit stress signals big stock gains ahead.

Third, focus on where quality is high and earnings are reliably growing faster than the overall market.

Fourth, buy companies loved by institutions…now.

For MAP PRO subscribers, below details each Mag 7’s MAP Score ranked from highest to lowest.

You need to be leaning into the best of breed this earnings season.

Couple that with our proprietary signals,

and you’ll be in good shape.

Here’s a look at map scores for each of the Mag 7.