The Magnificent Seven
Apple, Microsoft, Alphabet, Amazon, Meta, Nvidia, and Tesla — the so-called Magnificent Seven — have dominated U.S. markets for years, fueled by growth and the AI boom. Their performance has helped drive the S&P 500 to record highs.
But can seven companies really keep carrying the entire market?
The Numbers
2023: Magnificent Seven +75.7% vs. S&P 500 +24.2%
2024: Group +63%, accounting for over half of the S&P’s +23.3%
2025 YTD (to Sept 23): Roundhill Magnificent Seven ETF (MAGS) +18% vs. S&P 500 +13.8%
Today, these seven companies make up 36% of the S&P 500 — up from just over 30% in 2023. That means the other 493 stocks account for less than two-thirds of the index.
This level of concentration cuts both ways: outsized gains lift the market, but pullbacks can drag it down just as fast.
Risk and Resilience
Not the dot-com bubble: Unlike early 2000s tech, today’s valuations are backed by real profits and growth. As Russell Investments notes: “Today’s high valuations, particularly among the Magnificent Seven, are supported by solid fundamentals.”
Volatility matters: On Jan 27, 2025, Nvidia’s –17% drop erased $600B in market value in a single day, pulling the S&P down –1.5% and the NASDAQ –3.1%.
The lesson? Market reliance on just seven stocks magnifies both the upside and downside.
Takeaway
The Magnificent Seven have powered markets higher — but their dominance also makes the S&P more vulnerable to shocks. The best defense isn’t avoiding them altogether, but making sure your portfolio is diversified across sectors and asset classes.
As Fidelity puts it: “Diversification can help mitigate risk and volatility, reducing the severity of stomach-churning ups and downs.”
— Lauren
Editor, American Ledger