Investing.com -- JPMorgan expects the Magnificent Seven stocks to deliver further absolute upside, characterizing recent volatility in the group as a buying opportunity tied to positioning and technical factors rather than a fundamental shift.

Strategist Mislav Matejka told investors in a note on Monday that it advised adding to Mag-7 positions in March, and the recent pullback reflects "elevated positioning and extreme technicals related, together with some IPO anxiety, rather than a fundamental change in the backdrop."

The firm expects this weakness "will in our view be used as a buying opportunity."

However, JPMorgan cautioned that further drawdowns are possible given "extreme market concentration" and pushed back on the idea that mega-cap tech will dominate the second half as it did in parts of 2025.

The firm noted that market breadth has been at "record lows of late" and is looking for broadening in the second half.

JPMorgan reiterated its bullish stance on Cyclicals entering 2026 and sees Europe positioned to "catch up" in the back half of the year.

On tactical positioning, the firm suggested low-volatility stocks could see a partial recovery from their 19% year-to-date drawdown as bond yields move lower, though it does not expect this rotation to "have legs in 2nd half."

A rotation into Consumer is "showing some signs of life," with Luxury, Airlines, and Hospitality subsectors off their lows.

JPMorgan called Consumer "the one Cyclical subgroup which is yet to rally," noting a rotation into the space "would be a pain trade" given widespread underinvestment.

“At the overall market level, since 2H of March we kept advising to use any weakness to buy, and stay with it,” concluded Matejka.