David Sekera, a senior US market strategist for Morningstar, told me he thinks it’s a good time for investors of those stocks to lock in some profits and reinvest in companies that lagged last year’s rally.

The research firm’s five-star rating system for stocks is less bullish on the Magnificent 7 these days, after viewing almost all of them as undervalued to start 2023.

Microsoft, Amazon, and Tesla have three stars, indicating a fair market value, while Apple, Nvidia, and Meta have two stars, indicating they are overvalued. Alphabet, with a four-star rating, is the only one among the group considered undervalued.

Small-cap stocks, which some investors have speculated could have a big year, are a potential landing spot for money rotating out of the Magnificent 7, Sekera told me. But some investors might want to keep their money in large-cap stocks.

If that’s the case, blue-chip stocks like Exxon Mobil, Pepsi, and McDonald’s, all of which are rated four stars, could see interest, Sekera told me.

Still, money moving out of the Magnificent 7 and into other stocks is not guaranteed to be a smooth transition. Geopolitical risks, uncertainty around the next interest rate cuts, and a looming US presidential election pose additional unknown risks.