Analysts are cutting their estimates on Big Tech, raising another red flag for the market ahead. “In a notable reversal, Big Tech is now contributing marginally to negative revisions for the current fiscal year, though the impact is small relative to their market cap and there is some dispersion among the 6 mega-cap names,” Barclays analyst Venu Krishna wrote on Friday, adding that financials are now contributing the most to forward earnings expectations. This shift is putting pressure on overall S & P 500 earnings expectations. Barclays pointed out that 2025 earnings per share are expected to come in at $271, down from a previous consensus of $273 per share. To be sure, the full-year forecast usually falls at this point in the year as expectations are reevaluated. But, tech has been the primary driver of forward earnings estimates in recent years, as investors bet big on the artificial intelligence boom. XLK YTD mountain Tech sector this year This is the latest sign that the stock market that reached all-time highs just last week could be due for a pullback in the near term, especially as the “Magnificent Seven” is losing momentum . Nvidia is down 6% this year, and other momentum stocks have also waned. Alphabet is off by 7%, while Amazon has shed roughly 6% this year. The consumer discretionary and information technology sectors are the two biggest S & P 500 laggards of the year, down 6% and 3%, respectively. In fact, they’re the only two sectors trading in negative territory year to date. Jay Woods, chief global strategist at Freedom Capital Markets, said that “if technology is to take that hit, … then it gets me a little nervous.” Still, Woods sees some bright spots in this market. “Money still hasn’t left this market. It still rotates underneath the surface. The number of stocks beating the S & P 500 is very impressive.” “It’s just not the right stocks,” Woods added.
