Magnificent 7 ETF Hits Record Low Forward P/E Ratio

The Roundhill Magnificent 7 ETF has seen its forward price-to-earnings (P/E) ratio drop below 24, the lowest level since the fund launched over three years ago. This valuation dip occurred as investors shifted capital away from the group toward power providers and other AI-adjacent software and hardware companies.

Recent earnings reports from hyperscalers showing positive returns on artificial intelligence investments have shifted the narrative. Analysts at JPMorgan Chase & Co. and Morgan Stanley suggest the group may be poised for a catch-up trade, noting that forward P/E multiples for Nvidia, Meta, and Amazon have declined significantly.

Apple remains a notable outlier within the group, maintaining a higher valuation than it held a year ago despite the broader trend. Jefferies analysts pointed to the company's disappointing third-quarter sales, which resulted in the worst earnings-per-share movement for the stock in more than 12 years, suggesting the company remains an attractive short-side opportunity.