'Leaders will change'. RBC warned of a fight between Mag7 and value stocks

Despite the market leadership of major tech stocks, a battle could unfold between growth and value stocks in 2026, according to analysts at RBC Capital Markets, writes Yahoo Finance.

"While we now favor value stocks and the broad market as a whole over growth stocks and the 'Magnificent Seven' [Mag7 - a group of bigtechs, notably: Alphabet, Amazon, Apple, Apple, Ma Platforms, Microsoft, Nvidia and Tesla], we think it's important to remember that the battle between these sectors may not be over," wrote RBC Capital analysts led by Lori Calvasina, head of U.S. equity market strategy.

While this year has been defined by the success of the ten largest companies by market capitalization, the leaders are likely to change in 2026, according to RBC Capital Markets - thanks in large part to market sentiment.

"While we don't include ourselves in the camp of those who think what's happening is an 'AI bubble,' we don't think those concerns are unfounded," Calvasina noted.

According to RBC Capital experts, in 2026 the market favorites will be determined by factors already familiar to investors: labor market indicators, AI development, and political risks.

For value stocks' market leadership to take hold, earnings momentum must shift in favor of the broader market, Yahoo Finance writes.

The target, which analysts at RBC Capital Markets set for the end of 2026 for the benchmark S&P 500 index, is generally in line with the positive forecasts of other experts. According to Calvasina, the S&P 500 will reach 7,750 points by December next year. A similar forecast for 2026 was made last week by HSBC analysts: for the benchmark they set the target price at 7,500 points (9.5% higher than current quotes). Deutsche Bank went further, setting the target level for the S&P 500 at the end of 2026 at 8,000 points (about 17% above the last price). This is the most bullish forecast at the moment.

This article was AI-translated and verified by a human editor