As inflation remains sticky and fears of a recession still loom, experts say a 'Magnificent Seven' stocks are emerging - and they could be the safest place to invest your money.
Excitement around Artificial Intelligence (AI) has pushed up the values of big tech firms this year, with Apple, Meta and Nvidia leading the race.
Fellow tech titans Microsoft, Amazon, Tesla and Alphabet Inc., have also made significant gains - and commentators say they are driving a 'bull market.'
In all, these seven stocks accounted for around 90 percent of the stock market gains on Wall Street's S&P 500 this year - which has been gathering steady momentum.
Christine Short, an analyst at research firm Wall Street Horizon, told Axios: 'The overwhelming evidence suggested this year’s gains were the doing of the newly minted 'Magnificent Seven.'
Experts say a 'magnificent seven' stocks have emerged as tech titans see huge gains
As of Friday midday, Apple shares were trading 42 percent higher than a year ago while Tesla, Microsoft and Amazon were up 22 percent, 41 percent and 22 percent respectively.
Meanwhile Meta was up 77 percent and Alphabet Inc. 17 percent.
But it is software company Nvidia that Morgan Stanley said its 'top pick' stock as its value has shot up 179 percent in 12 months.
Nvidia - which is forecasted to make $11 billion this quarter - has been at the forefront of AI development - which analysts said had helped to push up its worth.
A note from Morgan Stanley seen by Insider read: 'The demand environment for AI training has continued to pick up since NVIDIA reported, with our industry contracts reporting daily new orders from customers that were not contemplated as major customers until now.'
It added that investors were moving away from traditional firms and focusing on AI infrastructure.
'While we have been positive since upgrading the [Nvidia] stock earlier in the year, we were nowhere near as optimistic as we should have been,' analysts said.
Tech stocks have long been popular with investors - so much so that a certain subset have earned the nickname 'FANG' stocks.
The acronym stands for: Facebook, Amazon, Netflic, Google.
Apple was later added to the list - causing them to be renamed 'FAANG' stocks. Such companies exploded in popularity in the 2010s.
But their investments in AI have once again bolstered their appeal even further.
CNBC money guru Jim Cramer recently said that Microsoft's gains were largely thanks to its $10 billion dollar bet on AI language processing tool chatGBT.
All tech firms have also benefitted from the Federal Reserve's decision to pause interest rate hikes - whichhas successfully calmed investor nerves across the board.
However, not everybody is convinced by the appeal of the 'Magnificent Seven' - as some experts urge caution among investors.
Nvidia - which is forecasted to make $11 billion this quarter - has been at the forefront of AI development - which analysts said had helped to push up its worth
Microsoft's gains are thought to be thanks to its $10 billion dollar bet on AI language processing tool chatGBT
Stock market commentator Nigel Green said in a statement: 'The noise is getting louder, and the frenzy surrounding these Magnificent Seven stocks is heightening.
'Yet this level of hype is dangerous as it could result in investors assuming these stocks are a silver bullet to build long-term wealth. And this isn’t the case.'
He added that investors should make sure they keep their portfolios diverse - and not pin all their money on big tech.
'Diversification is an investor’s best way to achieve success in the long term. This strategy reduces risk, smooths-out volatility makes the most of varying market conditions, maximizes long-term returns and safeguards against sudden external events,' he said.
It comes as experts speculate that the US is entering a 'bull market' - which is shorthand for a sustained period of rising stock prices.
Bull markets typically last for two to five years - and deliver an average S&P 500 gain of nearly 178 percent.
The longest ever bull market lasted for 11 years, after the Great Recession.
The current market has been sparked in part because the economy has so far avoided a sharp downturn, despite the Fed's rate hikes.
Though growth has slowed, the US job marked remains incredibly resilient. Inflation, though still too high, has come down significantly from last summer's peak without higher interest rates triggering a sharp increase in unemployment.
What is a bull market?
The most commonly accepted definition of a bull market is a 20 percent rise off a recent low, while a bear market is a 20 percent decline from a high.
But even that is open to interpretation, and different investors define the terms in different ways.
Part of the uncertainty is that there is no set definition of a bull or bear market, or any sort of regulatory body that declares one, such as the National Bureau of Economic Research (NBER) does with recessions.
While the S&P 500 has just cleared the 20 percent hurdle, for some market participants, a new bull market will not begin until the index clears its prior all-time high from January 2022.
