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What Are The Magnificent Seven Stocks?
Just as Wall Street moved on from the Nifty 50 in the 1970s as the term’s popularity and usefulness waned, the so-called FANG or FAANG stocks have lost their bite. Replacing them in the lexicon du jour is the Magnificent Seven Stocks: Alphabet (GOOGL), Apple (AAPL), Amazon (AMZN), Meta Platforms (META), Microsoft (MSFT), Nvidia (NVDA) and Tesla (TSLA).
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From GOOGL, AAPL and AMZN to META, MSFT, NVDA and TSLA, the Magnificent Seven stocks account for around half of the weighting of the Nasdaq.
Unlike the price-weighted Dow Jones Industrial Average, the Nasdaq composite and S&P 500 indexes are market-capitalization weighted.
As a result, the combined market caps of the Magnificent Seven stocks have a disproportional influence on the Nasdaq composite and Nasdaq 100.
To help address this issue, the Nasdaq rebalanced the index on July 24. That reduced the individual weighting of the Magnificent Seven stocks. But the rebalancing simply changed the total weighting of these seven megacaps from over 50% to nearly 50%.
In short, the Nasdaq 100 remains heavily concentrated on these megacap growth stocks. Resurgent gains by Apple, Microsoft, Amazon, Google and the other Magnificent Seven stocks boosted the tech-heavy index as a result.
Toward the end of last year, Nvidia stock, Meta, Microsoft, Amazon and Google stock all launched breakouts.
After stumbling of out of the gate to kick off 2024, these tech titans have shown strength. Nvidia has blasted out to yet another all-time high, while Meta stock gapped up Friday to a record high of its own. Meanwhile, after being trapped below its 50-day and 200-day lines, Tesla plunged over 12% on Jan. 25 on earnings, with analysts slamming Tesla’s opaque guidance and “train wreck” earnings call.
Google stock surged beyond buy range as Google Bard unveils the next era of its AI chatbot. But the search and cloud giant dropped back into its buy zone after reporting Q4 earnings. On Friday, Alphabet bounced back above its 50-day line.
Apple — the largest of the Magnificent Seven stocks — briefly bounced back above its 50-day line before slipping again. On Feb. 1, the iPhone maker topped estimates, but a slide in China sales worried investors.
How To Invest In Magnificent Seven Stocks In 2024
What Percentage Of Nasdaq Are The Magnificent Seven Stocks?
Here are the current individual market cap weightings of Alphabet, Apple, Amazon, Meta, Microsoft, Nvidia and Tesla. The weightings will, of course, change as their market caps fluctuate.
| Company | Symbol | Market Cap Weighting (%)* | Comp Rating* |
|---|---|---|---|
| Apple | (AAPL) | 10.1 | 81 |
| Microsoft | (MSFT) | 9.5 | 97 |
| Alphabet Class C | (GOOG) | 5.9 | 96 |
| Alphabet class A | (GOOGL) | 5.9 | 96 |
| Amazon.com | (AMZN) | 5.8 | 96 |
| Nvidia | (NVDA) | 5.4 | 99 |
| Meta Platforms | (META) | 4 | 99 |
| Tesla | (TSLA) | 2 | 39 |
*As of Feb. 5, 2024 |
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Follow Matthew Galgani on X (formerly Twitter) at @IBD_MGalgani.
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