To The Moon

In 2025, global financial markets are volatile, with the Federal Reserve's monetary policy direction becoming a key focus.

Against the backdrop of slowing economic growth and easing inflationary pressures, expectations of an interest rate cut are growing, culminating in a formal implementation on September 18th. Currently, the market is more optimistic about a 25 basis point cut.

This decision could be like a boulder dropped into a calm lake, sending ripples through the water. The US stock market's "Mag 7" ( $Apple(AAPL)$ $Microsoft(MSFT)$ , $NVIDIA(NVDA)$ , $Amazon.com(AMZN)$ , $Meta Platforms, Inc.(META)$ , $Tesla Motors(TSLA)$ , and $Alphabet(GOOG)$ ), the anchor of the tech sector, will be particularly impacted, with their stock price performance and investment value being the primary factors.

Data as of September 16th.

This article will deeply analyze the impact of the "Mag 7" before and after the rate cut, identify the most impacted stocks, and share some strategies.

I. The Overall Impact of the Rate Cut on the "Mag 7"

(I) Valuation Improvement

The rate cut directly lowers the market's risk-free interest rate. According to the discounted cash flow model, the discounted value of future cash flows increases, significantly boosting the valuation of high-growth tech stocks with concentrated cash flows in the long term. Looking back, after the interest rate cut cycle began in 2019, the "Mag7" stocks saw impressive gains over the three to twelve months, rapidly recovering and improving their valuations.

See public data statistics:

(II) Capital Repatriation and Stock Price Boost

When expectations of interest rate cuts grow, market expectations for the $USD Index(USDindex.FOREX)$ weaken, and some international capital flows back into the US stock market, seeking higher returns. Simultaneously, lower domestic capital costs in the US increase corporate stock buybacks and investors' willingness to leverage stocks.

As core assets of the US stock market, the "Mag7" stocks, with their large market capitalizations and excellent liquidity, have become a prime target for capital repatriation, driving stock prices higher. Recent data shows that prior to the September FOMC meeting, stock index benchmarks repeatedly hit new highs, led by the gold $Gold - main 2512(GCmain)$ , real estate $Real Estate Select Sector SPDR Fund(XLRE)$ , and biotech sectors . $Tesla Motors(TSLA)$ was a standout performer among the "Mag7" stocks.

(III) Improved Profit Expectations

Interest rate cuts stimulate economic growth and reduce corporate financing costs. For large companies like Mag7, this translates to lower debt interest expenses, directly increasing profits. Furthermore, the economic recovery drives increased consumer demand and demand for business services, boosting the company's core business.

For $Amazon.com(AMZN)$ , for example, interest rate cuts reduce costs in logistics, warehousing, and other processes. Simultaneously, consumer purchasing power increases, leading to expected growth in both volume and price for its e-commerce and cloud services businesses, and positive profit expectations.

II. Key Points for Investors to Focus on

(I) Federal Reserve Policy Trends

Despite the September interest rate cut, future interest rate trends remain uncertain. Investors should closely monitor speeches by Federal Reserve officials and economic data releases. If the economic slowdown persists and inflation remains subdued, the Fed may continue to cut interest rates. Conversely, if the economy overheats and inflation rises, expectations of rate hikes will intensify. Interest rate fluctuations directly impact Mag7's valuation and stock price performance and are a key factor in investment decisions.

(II) Macroeconomic and Geopolitical Risks

The global economic landscape is complex and volatile. Trade frictions and geopolitical tensions could impact Mag7's global supply chain and market demand. For example, if the Sino-US trade friction intensifies, it could impact sales of $Apple(AAPL)$ products in China, as well as the advertising business of Google and $Meta Platforms, Inc.(META)$ in China. Furthermore, geopolitical conflicts in the Middle East and Europe could trigger energy price fluctuations and financial market volatility, indirectly impacting Mag7's operations and stock price.

(III) AI Business Progress

Mag7 has invested heavily in AI and achieved significant results. Apple's Siri and Apple Intelligence, $Microsoft(MSFT)$ 's Copilot platform, and $Meta Platforms, Inc.(META)$ 's Orion AI/AR glasses all demonstrate the company's AI technology strength. Investors should monitor the revenue growth, user feedback, and technological breakthroughs of each company's AI business. AI is expected to become a powerful new growth engine for the company, driving long-term stock price growth.

III. Investment Strategy Considerations

(I) Long-Term Holding of High-Quality Individual Stocks

Mag7, with its strong innovation, market competitiveness, and global brand influence, offers significant long-term investment value. The start of a cycle of interest rate cuts presents a prime opportunity for investing in the "Mag7" sector. Investors can select individual stocks, such as Tesla and Nvidia, buying them in batches on dips and holding them for the long term to capitalize on their growth. For example, $NVIDIA(NVDA)$ , as the undisputed leader in AI chips, is poised for sustained, long-term growth in its performance and share price potential, driven by the explosive growth of the AI ​​industry and continued strong demand for GPUs.

(II) Optimizing ETF Allocation

For investors with a low risk appetite seeking stable returns, "Mag7"-related ETFs are a good option. For example, the $Roundhill Magnificent Seven ETF(MAGS)$ $CSOP MAG7(03454)$ ETF, which covers the seven major stocks, diversifies individual stock risk while capturing opportunities for overall sector growth.

This ETF has recently performed strongly, with a three-week gain of approximately 12%, nearly offsetting the losses of the previous few months. Investors can allocate a moderate amount of this ETF as a core holding to reduce portfolio volatility.