Credit: Burak The Weekender
The ‘Magnificent Seven’ is the informal name given to a collection of high-performing US stocks which, due to their size, have huge influence on the market as a whole.
Who are the Magnificent Seven?
● Alphabet
● Amazon
● Apple
● Meta Platforms
● Microsoft
● NVIDIA
● Tesla
Alphabet
Alphabet, the parent company of Google, is a multinational technology firm with a focus on search engine technology, online advertising, cloud computing, software, e-commerce, consumer electronics and, in recent years, artificial intelligence.
Along with its flagship search engine, the company is responsible for tools and platforms such as Gmail, Maps, Android OS, Chrome, Ads and Google cloud. It acquired YouTube in 2009. According to website analytics tool Statcounter, around 91% of web searches took place on Google in the year to July 2024.
Stock price on 3rd January 2020 - $68.08
Stock price on 31st July 2024 - $ 172.63
Amazon
Amazon is an ecommerce giant founded in 1994 as an online book shop. While Amazon is primarily known for its shopping platform, the firm also sells consumer electronics including the Kindle e-reader, Fire tablet and Echo smart speaker. It also launched a proprietary streaming service, Amazon Prime, in 2006.
Stock price on 3rd January - $ 93.75
Stock price on 31st July 2024 - $ 180.83
Apple
Apple is a Silicon Valley tech giant responsible for the consumer goods including the iPhone, iPad, Macbook and Apple Watch. The company designs and manufactures these personal tech items, along with software such as Apple Store, Apple Music and its iOS operating system. At time of writing, Apple is the world’s largest company by market capitalisation (the total value of shares in circulation).
Stock price on 3rd January 2020 - $ 74.36
Stock price on 31st July 2024 - $ 222.08
Meta Platforms
Meta is the tech giant behind social media platforms Facebook, Instagram and Threads, along with the popular messaging service, WhatsApp. Under its Reality Labs (RL) business, the firm also develops augmented and virtual-reality hardware, software and content. Most notable is the ‘metaverse’ – a virtual reality space where individuals and businesses can interact.
Stock price on 3rd January 2020 - $ 208.67
Stock price on 31st July 2024 - $ 474.83
Microsoft
Another tech giant in the M7 grouping is Microsoft Corporation. Best known for its Windows operating system and other software, the company also designs and manufactures the Xbox games console, and offers cloud computing services.
Stock price on 3rd January 2020 - $ 158.62
Stock price on 31st July 2024 - $ 418.35
NVIDIA
NVIDIA is a California-based tech firm that has specialised in graphics processing units (GPUs) for computers since 1999. These components play a key role in gaming and general computer graphics, but more recently have become indispensable when it comes to artificial intelligence (AI) applications.
Stock price on 3rd January 2020 - $ 5.81
Stock price on 31st July 2024 - $ 117.02
Tesla
Electric vehicle (EV) producer, Tesla, was founded in 2003. It designs and manufactures electric vehicles, EV charging infrastructure and solar electricity systems.
Stock price on 3rd January 2020 - $ 29.53
Stock price on 31st July 2024 - $ 232.07
Potential risks and drawbacks
The M7 (Magnificent Seven) stocks, despite their strong performance, are not immune to volatility. According to Winter at Killik & Co, these stocks have exhibited higher volatility than the average S&P 500 stock, making them a riskier investment.
For instance, their combined value dropped by 15% between July and August 2024, illustrating their susceptibility to market fluctuations. Performance among individual M7 stocks can vary significantly. While Microsoft saw a 10.1% increase in share price since the beginning of 2024, Tesla's shares fell by 16.4% in the same period. There are also concerns about the sustainability of the AI-driven growth that has propelled these stocks. Coatsworth of AJ Bell warns that a shift in focus from AI investments to financial returns could diminish the momentum for AI-driven companies like NVIDIA and Microsoft.
Jason Hollands of Bestinvest notes that while the M7 acronym is currently popular, such groupings are often temporary as market dynamics change and different companies come into or fall out of favor
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