Investing.com -- JPMorgan maintained its constructive stance on the Magnificent Seven in a note to clients on Monday, arguing that the group's derating earlier this year has left room for further gains even as the bank stops short of calling a repeat of last year's narrow, tech-driven rally.

Analyst Mislav Matejka said the bank has consistently advised clients to buy into equity weakness triggered by the Iran conflict since the second half of March, and continues to see upside ahead for Mag-7.

While flagging that the headline risk from the Middle East remains, JPMorgan said "earnings are more than compensating for the stocks rebound," pointing to the group's valuation hitting a 10-year low in March as creating the foundation for recovery.

The bank was careful to temper expectations, noting it does not expect a replication of 2025, when the rally in the second half was almost entirely concentrated in mega-cap technology.

JPMorgan remains fundamentally cautious on AI cannibalization trades but sees tactical stabilization as likely given the extent of the selloff in that cohort.

Beyond Mag-7, JPMorgan flagged the emerging market memory trade as another area with staying power, noting that "meaningful supply additions are not coming before the start of 2028."

On broader positioning, the bank stated that Consumer Cyclicals remain under pressure from profit warnings and cautious guidance but could see a better second half as oil prices ease and bond yields decline.

JPMorgan suggested investors look to add exposure to the sector in the summer, while also flagging low-volatility stocks and Utilities as increasingly interesting as yields move lower.