“Magnificent Seven’ Review: The ‘Magnificent Seven’ stocks of the US—Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta Platforms, and Tesla—proved their worth with substantial gains, dominating market trends in 2023. In 2024, their performance impressed investors again, solidifying their significant influence in the US market. The ‘Magnificent Seven’ is a group of seven high-performing and influential stocks in the technology sector.

According to SEC-registered brokerage and investment advisor Vested Finance, the popular ‘magnificent seven’, due to their massive market capitalizations, these US stocks have an outsized influence on the Nasdaq Composite and S&P 500 indexes, driving broader market trends. 

Also Read: Tech giants Nvidia, Tesla emerge top US-listed stock picks by Indians in 2024; ETFs gain momentum

What are ‘Magnificent Seven’ stocks?

These seven US tech giants, comprising the elite ‘magnificent seven’ pack, are companies at the forefront of sectors such as artificial intelligence (AI), electric vehicles, cloud computing, and digital services. They still have the potential for significant growth, but according to experts, investing in them still carries risks since these factors have already been priced. 

As of 2024, Nvidia leads the Mag Seven group with a market capitalisation of $3.36 trillion, driven by the AI demand boom in the tech sector. Analysts believe the usual risks of market volatility, regulatory changes, technological disruptions, and global economic conditions can influence the performance. 

The term ‘magnificent seven’ has been popularized to describe a set of dominant companies, particularly in the US tech sector. The group comprises the top seven US tech leaders – Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla. They span four sectors: technology services, electronic technology, retail trade, and consumer durables. 

They operate in internet software/services, telecommunications equipment, internet retail, packaged software, semiconductors, and motor vehicles. Over the past five years, Nvidia has led the pack with an impressive return of approximately 3,000 per cent, closely followed by Tesla with a 1,200 per cent gain.

Also Read: Magnificent Seven pushes tech-heavy Nasdaq higher: Nvidia rises 2%, Meta up 1% ahead of earnings week, Tesla gains 3%

‘Magnificent Seven’ Review 2024: Top gainers

In 2024, investor’s favourite AI chip manufacturing giant Nvidia emerged as the top gainer in the magnificent seven-pack, with its stock price soaring as much as 183 per cent year-to-date (YTD). Nvidia was followed by Meta, which ranked second in the US tech giant pack this year. Here’s a closer look at each of the seven stocks from the US tech giant pack:

1. Nvidia: +183.2% YTD

Nvidia stood out in 2024, with a massive 183.2 per cent YTD gain. The company remains the leader in AI and GPU technologies, benefiting from surging demand for AI-powered applications and its dominant position in the AI chip market. Nvidia’s Q3 earnings exceeded Wall Street expectations, with a substantial increase in earnings and revenue compared to last year. 

However, the stock recently experienced a three per cent decline amid reports of an investigation in China for anti-monopoly violations. Despite this setback, Nvidia’s growth prospects in the AI space remain robust, and it continues to be a key driver of the tech and semiconductor sector.

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2.Meta Platforms: +73.4% YTD

Meta, formerly Facebook, has seen a remarkable 73.4 per cent YTD increase in its stock price. The company’s focus on the metaverse and virtual reality (VR) platforms and its growing presence in AI have bolstered investor sentiment. Meta’s shift towards AI-powered advertising and its investments in augmented and virtual reality technologies have contributed to its strong performance. The company’s ability to navigate challenges and capitalize on AI-driven growth trends has made it stand out in 2024.

3.Tesla: +41.4% YTD

Tesla has had an impressive year, with a 41.4 per cent YTD increase in its stock price. The electric vehicle giant reported a nine per cent profit increase in Q3, surprising investors and reflecting strong demand for its vehicles. Despite some challenges, such as slight revenue misses, Tesla’s focus on expanding its vehicle production capacity and growing presence in the renewable energy sector has been key to its continued growth. Broader market trends heavily influence Tesla’s stock price, but its leadership in the EV market ensures it remains a key component of the Magnificent Seven.

4. Amazon: +40.5% YTD

Amazon’s performance has been impressive, with its stock gaining 40.5 per cent YTD. The e-commerce and cloud giant exceeded analyst expectations for its Q3 earnings, with adjusted earnings of $1.43 per share on $158.9 billion in sales. Amazon’s growth is driven by its Amazon Web Services (AWS) cloud business. Still, its innovation in AI through Amazon Bedrock, a fully managed service offering foundation models from leading AI companies, has also boosted investor confidence. The company’s ability to reclaim its 201.20 buy point reflects investor optimism about Amazon’s growth trajectory.

Also Read: US Fed lowers benchmark rate to 4.25-4.50% for third straight meeting, eyes two cuts in 2025; 5 key highlights

5. Apple: +26.0% YTD

Apple, while still a leader in the tech space, saw a 26 per cent YTD gain in its stock price. Despite posting strong quarterly earnings—$1.64 per share, with a 12 per cent increase year over year (YoY)—the company offered a weaker-than-expected sales guidance for the latest December quarter for 2024. 

The slow rollout of its iPhone 16 and the widespread adoption of its AI features are seen as short-term headwinds. However, Apple’s long-term dominance in the consumer electronics market, combined with its potential in AI, ensures that it remains one of the most influential stocks in the Magnificent Seven pack.

6. Alphabet: +22.7% YTD

Alphabet, Google’s parent company, has seen a 22.7 per cent YTD gain. Google’s dominance in digital advertising and search remains a key driver of Alphabet’s growth. At the same time, the company’s investments in AI and machine learning technologies are expected to pay off in the coming years. Alphabet continues to innovate across various sectors, including cloud computing, AI, and autonomous vehicles, and its efforts to integrate AI into its search and advertising businesses are showing promising results.

7. Microsoft: +14.7% YTD

Microsoft has also been a strong performer, though with a more modest 14.7 per cent YTD gain in its stock price compared to its peers. The company exceeded expectations in its Q1 earnings, posting earnings of $3.30 per share on $65.6 billion in sales, driven by the growth of its cloud computing business. However, its guidance for the current quarter fell slightly below analyst estimates, which tempered the enthusiasm among investors. Microsoft’s strength in cloud computing and AI, particularly through its Azure platform, ensures it remains a critical player in the tech space.

Also Read: Wall Street Today: US stocks extend holiday-thin trading dragged by Nvidia, set for 1% weekly gain; S&P up 25% YTD

US stock market in 2024

The US election results were the major driver of the US market performance in the latest quarter. Donald Trump’s victory, coupled with Republican dominance in both chambers of Congress, raised expectations of continued pro-business policies. The anticipated extension of tax cuts and fiscal policies to boost American exceptionalism ignited investor optimism.

The S&P 500 is up 27.62 per cent YTD. In November, the index logged its best month of the year, gaining just under six per cent. Similarly, the Russell Midcap index and the Russell 2000 (small-cap) index posted strong gains during the same period, reflecting broad market strength.

Small-cap stocks, particularly those exposed to domestic US markets, were the primary beneficiaries of this shift. Over the last month, US small-cap stocks surged by 11 per cent, with these companies accounting for 62 per cent of the developed world’s small-cap universe. As a result, the MSCI World Small Cap Index registered a notable seven per cent gain in November.

Growth stocks slightly outperformed their value counterparts, gaining 5.3 per cent compared to the 3.9 per cent return of value stocks. According to Vested Finance, in 2024, equity markets are diversifying, with sectors outside of communication services and information technology rising to the top. 

While these two sectors dominated in 2023 and early 2024, financial stocks have taken the lead in 2024, followed closely by communication services, information technology, and utilities. According to the brokerage’s data, by November, these four sectors had outpaced the broader S&P 500 index, yet every sector remained in positive territory for the year.

Vested Finance provides brokerage services to Indian investors who want to invest in US-listed securities.

Disclaimer: The views and recommendations provided in this analysis are those of individual analysts or broking companies, not Mint. We strongly advise investors to consult with certified experts, consider individual risk tolerance, and conduct thorough research before making investment decisions, as market conditions can change rapidly, and individual circumstances may vary.