In a growing chorus, Wall Street strategists are dismissing worries about a potential bubble in US technology megacap stocks. The team at JPMorgan Chase & Co. recently highlighted that the valuations of the seven tech giants that have been driving the record-breaking rally on Wall Street are currently lower compared to the rest of the S&P 500 than the average of the past five years.

According to strategist Mislav Matejka, there is a concern over the strong outperformance of these tech giants, but he notes that the group is currently trading at relatively lower levels compared to a few years ago, given their earnings delivery. While it is acknowledged that these stocks are not immune to profit disappointments ahead, Matejka suggests that in the case of general earnings disappointment, they might fare better than traditional cyclicals reliant on economic strength.

Goldman Sachs Group Inc. strategists also expressed a similar sentiment last week, stating that although the concentration of the US equity market is currently the highest in decades, the top stocks trade at much lower valuations than the largest names did at the peak of the tech bubble.

The group of tech giants, known as the "Magnificent Seven," includes Apple Inc., Google parent Alphabet Inc., Amazon.com Inc., Facebook owner Meta Platforms Inc., Microsoft Corp., Nvidia Corp., and Tesla Inc. These companies were responsible for driving the significant gains in the S&P 500 last year. However, their performance has diverged more recently, with Nvidia reaching a record high while Apple shares entered a technical correction amid concerns about slumping iPhone sales and regulatory pressures.

Bank of America Corp. recently revealed that technology funds experienced their largest outflows on record, indicating some investor caution. However, strategist Michael Hartnett from the same firm reiterated that technology stocks could still have more room to rally.

It remains to be seen how these tech giants will navigate potential headwinds in the future, but for now, Wall Street strategists are playing down concerns of a bubble and highlighting the comparatively lower valuations of these stocks within the S&P 500.

Despite recent market fluctuations and investor hesitations, the performance of the tech sector will continue to be closely monitored as the benchmark index, S&P 500, continues to reach all-time highs in 2024.

(Note: This article is generated based on the provided information and does not contain any additional information beyond what was mentioned.