Technology stocks, especially the Magnificent 7 technology stocks are overvalued currently.
With current interest rates at 5.50 % Federal Funds Rate targeted by the Federal Reserve, the Nasdaq Composite is overvalued by 32 % on average in the mid-term. The Magnificent 7 Apple, Microsoft, Alphabet, Amazon, Meta, NVIDIA and Tesla are overvalued by 43 % on average.
If interest rates go down to 4.0 % Federal Funds Rate, the Nasdaq Composite will be overvalued by circa 22 %, according to Wolfteam Ltd.'s estimates.
If the Federal Funds Rate goes up to 6.25 %, the Nasdaq Composite will be overvalued by 44 %, while the Magnificent 7 will be overvalued by 57 %, according to Wolfteam Ltd.'s projections and estimates.
Technology stocks are very sensitive to interest rates.
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