Why these analysts think it’s “time to retire the Magnificent 7 name”

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The so-called “Magnificent 7” group of companies — Nvidia (NASDAQ:NVDA), Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), Alphabet (NASDAQ:GOOGL), Meta Platforms (NASDAQ:META), Amazon (NASDAQ:AMZN), and Tesla (NASDAQ:TSLA) — have surged over much of the last 12 months.

So far this year, the seven companies have accounted for roughly 40% of the benchmark S&P 500’s total return, Citi analysts said in a recent note.

Yet analysts believe that gains in the Magnificent 7 are now concentrating even further into just four of these firms.

In particular, they cited a spike in shares in artificial intelligence chip designer Nvidia, calling the company “its own animal.” Powered by blockbuster quarterly earnings, Nvidia’s shares gained $277 billion last Thursday, the biggest single-day gain in Wall Street history. At one point last week, the stock touched a $2 trillion market valuation.

The analysts added that tech giant Microsoft, Facebook-owner Meta Platforms, and e-commerce group Amazon are all in “strong shape.” The three firms posted robust quarterly earnings and outlined plans to develop their AI capabilities.

However, the analysts argued that the remaining three — Google-parent Alphabet, MacBook maker Apple, and electric vehicle maker Tesla — are “deteriorating and look quite vulnerable.” Alphabet’s key holiday-season advertising revenues disappointed estimates, while concerns swirl around demand for Apple’s all-important iPhone gadget and EV sales growth at Tesla.

“[I]t’s time we retire the Mag 7 name, because it’s really more like the Mag 4 or Fab 4 these days,” the analysts said in a note on Monday.

Source: Investing.com