The “Magnificent Seven” stocks sound pretty amazing, don’t they? The Magnificent 7 is a list of seven stocks that have performed exceptionally well in 2023. These businesses have dominated the news, and as of Q1’23, they are still the fastest-growing stocks in America. These stocks are Apple, Microsoft, Alphabet (Google), Amazon, Nvidia, Meta Platforms (Facebook), and Tesla.
The Magnificent Seven thrives on investors, small and large advertising, and cash flow due to technological advancements.
Just as Apple transformed how we use technology with the release of the iPhone, investments in artificial intelligence (AI) could be far more widespread. Whether for convenience, curiosity, or potential necessity, having a place in one’s portfolio depends on each buyer. However, these stocks all have in common with their participation in an AI gold rush amidst the current economic climate.
Who are the Magnificent 7?
The companies on the Magnificent Seven list greatly influence our current cultural climate, including social media, e-commerce, internet software, and AI. These attributes make for tempting stock gains for eager buyers willing to get an edge on the market. If we look at the Magnificent Seven as a “fund,” and with the rise in online consumerism and globalization, these stocks seem unlikely to slow down in 2024.
Nvidia
Nvidia was one of the most successful stocks on the market in 2023. The company specializes in creating artificial intelligence (AI) data chips, which boosted its revenue growth to unprecedented levels. NVDA stock shot up to 233% in 2023, one of last year’s best performances.
The company supplies its H100 as a leading graphics processing unit (GPU) today, but it is now developing shipments of its new H200 GPU. The latter processes live prediction data analytics at twice the speed of the former GPU and uses half the energy of the previous GPU model, which will benefit data center operations.
The company’s FY’24 financials showed a 217% surge in its yearly data center revenue to $47.5 billion, with a record-high total revenue of $60.9 billion. Its profits also ballooned by 288% to $12.96.
Meta Platforms
Since launching Facebook in 2004, Mark Zuckerberg’s company has become one of the most influential in the world. His social media services have seen various iterations and updates throughout the past 20 years, with the most recent changes regarding AI.
Meta Platforms serves nearly four billion active users (DAU) daily through its social networks Facebook, Instagram, and WhatsApp.
In January 2024, Zuckerberg announced that Meta plans to build its artificial general intelligence, AGI, ” which meets or surpasses human intelligence in almost all areas.”
The surge in AI technology helps Meta enhance content algorithms for users on its social media platforms, thus drawing more users to its services. Meta’s adaptation to new forms of technology could partially explain why the company has been successful in the stock market.
Meta’s stock price hit a record high of $504.422.30 on March 4, 2024 – a record that is surely to be beat.
Microsoft
Microsoft’s stock has so far underperformed the group in 2024. The company’s 52-week range of 245.73 to 420.82 represents a range of 71%. However, this momentum will likely continue, thanks to the company’s decision to double down on its AI initiatives. Inspired by leading AI organizations such as ChatGPT and OpenAI, Microsoft launched Microsoft Copilot, with “Microsoft gaining a $13 billion investment into AI programs.”
Microsoft has applied AI technology throughout its interface, including Bing and Edge browsers. The company also created a Copilot AI virtual assistant available to users of Microsoft 365 and the Microsoft Power Platform, which “allows businesses to create websites and software without writing code.”
Azure, Microsoft’s business cloud platform, is becoming the largest expansion out of its parent company’s services. Azure has “over 53,000 clients accessing their AI models and tools” to grow their businesses. The company’s revenue “increased by 30% year over year by Dec. 31, with six of those percentage points attributed specifically to AI.”
Alphabet
Alphabet has also underperformed compared to its counterparts in the group with a 52-week range of $89.42 to $153.78 – still, that represents a spread of 72% as of March 2024.
The tech giant has six products and services with billions of users. The search engine has also started expanding its potential with AI, which could be a game changer for Alphabet stock.
For instance, Google debuted its Gemini AI model on Dec. 6, although Bloomberg reported that the product’s capabilities turned out to be edited in a demo video. The company admitted the demo was prompted and edited with still image frames to make the AI’s response times “appear faster.”
That said, during the past five years, Alphabet’s operating margins averaged 25.8%. There aren’t many other examples of this in the market. And with the advent of AI, these statistics could even become higher.
Tesla
Tesla is a company that needs no introduction. It’s well known for its electric cars, which have declined in value and production. For instance, “Tesla made 80% of all EVs (electric vehicles) sold in America, according to Cox Automotive.”
Tesla stock has been under pressure. On Jan. 24, reported earnings decreased 40% to 71 cents per share, while revenue was $25.17 billion, up 3.5% from a year ago. This comes despite the corporation being one of the best-performing stocks in 2023, with returns of +109.74%.
Amazon
Tech giant Amazon reported Q2’24 results exceeding expectations for both earnings and revenue. The e-commerce company has grown consistently throughout 2023, and its stock value surpassed $170 in February.
According to some investors, the company’s stock appears cheap, with some buyers witnessing large returns over the past decade. Amazon’s ambitious reinvestment strategy, supported by the company’s cash flow, will likely reward shareholders in the future.
Amazon’s domination of the online shopping industry and its position as one of the top employers in the U.S. could provide further success for its stock. As more retail stores close down, Amazon gains customers and a higher market cap daily. The company’s acquisition of AI startups, including a $4 billion investment in Anthropic, could also lead to more of these gains.
Apple
Apple’s stock has also been underperforming compared to the Magnificent Seven companies, with its stock price down about 7.82% YTD at the time of this writing.
Reasons for the decline include the recent 2 billion fine from the EU, the fact that Apple has canceled their decade-long electric car project destined to be the “mother of all AI projects” by Apple CEO Tim Cook, and because iPhone sales in China are declining.
Apple also lost its position as the world’s most valuable company by market cap to its tech rival, Microsoft.
What To Learn From These Stocks
Although stock prices frequently change throughout the year, it seems that the Magnificent Seven will continue their reign for the foreseeable future, thanks to their current industry domination. The influence that these major corporations have on people internationally is undeniable. Investing in technological advancements, especially the advancement of AI, means these companies could become unstoppable
The Magnificent Seven’s familiarity can only play into their favor, as they essentially get by with brand recognition alone. The internet has been an integral part of human life, and we are increasingly becoming wired to all of these major brands online, therefore boosting their popularity with investors.
