What Are the Magnificent Seven Stocks? (2024)

The “Magnificent Seven” might sound like the title of an old Western film or what a large family might name its group chat, but in finance the moniker is being used to describe a group of high-performing tech stocks: Microsoft, Apple, Nvidia, Alphabet, Amazon, Meta and Tesla.

People began using the term after Bank of America stock analyst Michael Hartnett applied the term to the companies in a May 2023 note to investors. That year these seven stocks each returned at least 48% (and some more than 100%). They were credited with carrying the market to 26% return and without them that figure would have been closer to 10%, according to S&P Dow Jones Indices.

In the first quarter of 2024, Microsoft, Nvidia, Amazon and Meta continued to rise, jumping 12%, 82% 19% and 37% respectively. Apple and Tesla were both down for the quarter 11% and 29% respectively, and Alphabet struggled before ending the first three months of the year up 8%. Now, some investors are instead focused on the “Fab Four.” But experts still say all seven have growth potential, especially amid the continuing artificial intelligence (AI) boom.

“These are the structural winners of this generation with a magnitude in scale that we’ve never seen before,” says Jake Bleicher, a portfolio manager at Carson Wealth, a financial planning and wealth-management firm.

What are the Magnificent 7 stocks?

Below are more details about each of the Magnificent Seven stocks, listed by market capitalization. The data is from Morningstar and as of April 9, 2024.

Microsoft

Market capitalization: $3.12 trillion

P/E ratio: 38.54

Microsoft may have risen to fame in the 1980s for its dominant computer-operating system, but it has since diversified into videogames (Xbox), cloud computing (Azure) and AI (Copilot). You would be hard-pressed to find an industry Microsoft doesn’t have its hands in, and in early 2024, it surpassed Apple as the most valuable company in the world. Microsoft has also emerged as an AI leader. It’s currently fairly valued, and a strong core portfolio holding for long-term investors, says Dave Sekera, chief U.S. market strategist for Morningstar.

Apple

Market capitalization: $2.59 trillion

P/E ratio: 26.43

With the iPhone, Apple has changed the way people around the world communicate, manage their money and stay entertained. While the company Steve Jobs co-founded also makes computers, tablets and wearables, its smartphone still makes up the majority of its sales—and that could be a problem. Growth is slowing because of weak iPhone demand in China and the lack of new, exciting products, Bleicher says. The company is also facing threats to its services business from regulators around the world, but it may be able to carve out more opportunities in the AI sector. The company is fairly valued, according to Morningstar.

Nvidia

Market capitalization: $2.16 trillion

P/E ratio: 98.22

Nvidia is the poster child for AI. The semiconductor company designs and manufactures graphics processing units (GPUs), chips used to develop AI products. As artificial intelligence excitement has surged, so has Nvidia’s stock, which accounted for 26% of the S&P 500’s total return from the start of the year to April 8, according to S&P Dow Jones Indices. As more companies jump into the AI race, however, Nvidia is bound to face competition, which makes the chip maker’s future somewhat uncertain. Still, “this company is probably going to be the most important company to our civilization over the next decade,” says Angelo Zino, an analyst leading the technology team at investment research firm CFRA Research.

Alphabet

Market capitalization: $1.95 trillion

P/E ratio: 26.85

When it comes to the online search market, Alphabet is king. A whopping 76% of the revenue Google brings in comes from online ads. That concentration could be a challenge for the company in coming years. There are concerns that AI’s developments mean people will no longer need search engines in the way they do now. Also, like many companies on this list, Google is also facing regulatory troubles, including losing an antitrust case brought by videogame maker Epic Games over the power of Google’s app store late last year. Still, Morningstar analysts say the stock is still within a range they consider fairly valued.

Amazon

Market capitalization: $1.92 trillion

P/E ratio: 65.36

Since Jeff Bezos launched Amazon.com as an online bookseller in 1994 it has transformed into one of the largest retailers in the world. Today, the business also includes the largest cloud-computing service provider in the world, supermarket chain Whole Foods and streaming service Twitch. Amazon benefited handsomely during the pandemic as consumers ordered goods to their home and businesses relied on the company’s cloud platform. More recently, the e-commerce momentum has slowed and the cloud competition has become more fierce, says Scott Kessler, global sector lead for technology and communications at Third Bridge. “There are a lot of questions about how much more market share they can gain,” he adds. The stock is fairly valued, according to Morningstar.

Meta Platforms

Market capitalization: $1.32 trillion

P/E ratio: 32.22

Tesla

Market capitalization: $545.2 billion

P/E ratio: 56.51

For years, the Elon Musk-led company has been the clear winner in the electric vehicle market thanks to its rapid expansion. Now, with the stock down around 30% for the year, the company is struggling. Tesla has been cutting prices in an effort to increase demand for EVs as interest slows, its profit margins fall and competition gets fierce; it recently reported its first year-over-year decline in quarterly car deliveries since 2020. The stock is traded within a range Morningstar considers fairly valued, but it comes with a very high rating for uncertainty.

The Magnificent Seven vs FAANG stocks

Wall Street loves its shorthand. Back in 2013 Meta (then known as Facebook), Amazon, Apple, Netflix and Alphabet (formerly Google) were dominating the market and became known collectively by the acronym FAANG. When Netflix’s performance started to decline, FAANG was replaced with Mamaa (for Meta, Amazon, Microsoft, Apple and Alphabet).

While the FAANG stocks and Magnificent Seven certainly have overlap, the latter came about specifically as interest in artificial intelligence skyrocketed. Nvidia—by far the best-performing of the group year-to-date—provides the chips that powers AI while Tesla has also been at the forefront of AI with its self-driving capabilities and robots. Given that the other stocks on this list dominate the tech industry, it’s no surprise that they are jumping to make AI a substantial part of their businesses, and seeing growth because of it.

The pros and cons of investing in the Magnificent 7

The allure of these stocks is obvious when you look at past performance—but that doesn’t mean their future paths are guaranteed.

The benefits of investing in the Magnificent 7

When it comes to investing, the future outlook is much more important than past performance—and stock analysts say the Magnificent Seven still have room to grow.

That’s in part because investors have confidence these companies will continue to generate steady earnings. They all have massive reach, evidenced by the number of iPhones you’ll see when you sit in a coffee shop, or times you whip out your phone to check Instagram or order delivery via Amazon Prime. While all these stocks started out with the goal of disrupting the market, they now dominate, producing robust earnings and generally maintaining healthy balance sheets.

“These are companies that should be able to grow their earnings by at least 10 to 15% at an annualized pace over the next decade,” Zino says.

Another upside to investing in these companies comes from their potential to unlock even more growth opportunities amid the AI boom. From Google’s chatbot to Nvidia’s hardware that powers AI computing around the world, all seven of these companies have been at the forefront of AI developments—and they are showing no signs of slowing down. Microsoft recently announced it’s opening a new AI hub in London, for instance, and Amazon said it has invested $2.75 billion in the AI start up Anthropic.

The downsides to investing in the Magnificent 7

While these companies have gotten the attention of investors worldwide, they’ve also attracted the eyes of regulators in the U.S. and beyond. In March, the Justice Department accused Apple of monopolizing the smartphone market in a lawsuit. Along with Alphabet and Meta, Apple is also being investigated by European Union regulators for potential violations of new competition laws. And while AI has given these companies greater revenue opportunities, another risk of investing in tech-oriented companies is that the landscape is constantly evolving.

“Over time there could be changes in technology that could potentially threaten any one of these seven companies,” Zino says.

There’s also the fact that much of the growth may be behind us, says Sekera. “What’s worked for the last year and a half is highly unlikely to be what’s going to work in the market going forward,” Sekera says.

Finally, investing in individual stocks tends to come with a lot more risk than buying a mutual fund or exchange-traded fund. When you pick stocks, you’re playing a bit of a guessing game about how a company will perform in the future. When you invest in funds, you’re automatically diversifying your portfolio, lowering your overall risk.

Meet the contributor

Mallika Mitra

Mallika Mitra is a contributor to Buy Side from WSJ.