Shares of Amazon (AMZN) came under pressure on Thursday, following disappointing fourth quarter earnings from Alphabet (GOOG, GOOGL) earlier in the week.

Brad Klapmeyer, senior portfolio manager at Macquarie’s Large-cap Growth Team, joins Market Domination Overtime to discuss recent cloud revenue misses and the market dominance of the “Magnificent Seven,” comprising Alphabet, Apple (AAPL), Nvidia (NVDA), Tesla (TSLA), Amazon, Meta Platforms (META), and Microsoft (MSFT). He points out that concentrated investor focus on these companies has led to the underperformance of other solid stocks.

“We’re all in favor of having big concentrated positions as bets in the portfolio,” Klapmeyer says. “What we don’t like is with an index being forced into these large positions, all of a sudden we’ve been overrun with the major thematic at the top of the Russell 1000 growth.”

“We also want investors to be aware if they think that they’re investing in a passive, diversified ETF, they may be in the same situation where 55% of their passive, diversified ETF is actually in these large positions,” he adds.

Klapmeyer notes that financial services stocks and payment companies could be good places to invest right now.

To watch more expert insights and analysis on the latest market action, check out more Market Domination Overtime here.

This post was written by Josh Lynch