What are the Magnificent Seven stocks and why do they matter?
It might seem like a no-brainer to dump your money into these Magnificent Seven stocks — but not so fast
![Bundles of US 1 dollar bills hovering over white surface in bar graph formation showing variable growth under blue wave pattern](https://cdn.mos.cms.futurecdn.net/LrmXPK7xVKwfr4PnkVScFB-415-80.jpg)
If you've had your eye on any stock-related news in recent months, there's a good chance you've come across "the Magnificent Seven." If you're not yet familiar, you're not that far behind — the name was only recently coined by Bank of America analyst Michael Hartnett in 2023, per Investopedia.
"Originally, the phrase was a reference to a 1960 Western film, 'The Magnificent Seven,' which was directed by John Sturges and depicts a group of seven gunmen," reports Investopedia. But today, it's "been repurposed to reference a group of seven high-performing and influential stocks in the technology sector, borrowing from the meaning of a powerful group."
What are the Magnificent Seven stocks?
The Magnificent Seven is made up of the following seven stocks:
Subscribe to The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.
![https://cdn.mos.cms.futurecdn.net/flexiimages/jacafc5zvs1692883516.jpg](https://cdn.mos.cms.futurecdn.net/flexiimages/jacafc5zvs1692883516-320-80.jpg)
Sign up for The Week's Free Newsletters
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
- Apple (AAPL)
- Microsoft (MSFT)
- Alphabet (GOOG and GOOGL)
- Amazon (AMZN)
- NVIDIA (NVDA)
- Tesla (TSLA)
- Meta Platforms (META)
As The Motley Fool notes, "all seven companies are focused on capitalizing on large technology-driven growth trends," though technically, five are tech stocks, and the other two are tech-focused consumer discretionary stocks."
Why are these stocks deemed the Magnificent Seven?
So what makes these seven stocks so, well, magnificent? Put simply by NPR, in 2023, "the S&P 500's impressive performance is actually thanks almost entirely to just a handful of stocks" — the Magnificent Seven. According to Kiplinger, "in 2023, the Magnificent Seven stocks logged an impressive average return of 111%, compared to a 24% return for the broader S&P 500."
According to Investopedia, there are a culmination of factors driving these stocks' magnificent performance: "adaptability," "strong financial health," "global reach," "strong market position," and "worldwide brand recognition." As Investopedia explains, these companies "are at the forefront of technological changes across the economy, and they consistently develop new products and services that drive consumer demand and business growth."
Should you invest in the Magnificent Seven stocks?
It might seem like a no-brainer to dump your money into these Magnificent Seven stocks — but not so fast. As Kiplinger points out, "these Magnificent Seven stocks are not bulletproof." In fact, just in 2022, "all seven of these names finished the year with double-digit percentage losses," reports Kiplinger.
There are other risks to weigh as well. Per The Motley Fool, "one of the biggest risks of investing in these stocks is their high valuations" — in other words, "it could be hard for those already large companies to grow into their valuations in the future, potentially causing their stock prices to underperform." Further, according to The Motley Fool, "tech spending tends to be cyclical," which means that "if there's a recession and economic growth slows, it could significantly affect the growth of the Magnificent Seven."
Other risks to take into consideration when it comes to the Magnificent Seven include "regulatory and legal risks," "technological disruption," "market saturation and competition," and "cybersecurity threats," among others, reports Investopedia.
So what does that all mean for your portfolio? As Kiplinger puts it, "prudent investors must stay aware of market environments and diversify their portfolios." Investopedia offers similar advice, noting that "while the Magnificent Seven offer potential for substantial growth, they also require careful analysis and a balanced approach considering their strengths and the various external factors that could influence their future trajectory."
Create an account with the same email registered to your subscription to unlock access.
Sign up for Today's Best Articles in your inbox
A free daily email with the biggest news stories of the day – and the best features from TheWeek.com
Becca Stanek has worked as an editor and writer in the personal finance space since 2017. She previously served as a deputy editor and later a managing editor overseeing investing and savings content at LendingTree and as an editor at the financial startup SmartAsset, where she focused on retirement- and financial-adviser-related content. Before that, Becca was a staff writer at The Week, primarily contributing to Speed Reads.
-
Red Speedo: a 'darkly comic' doping drama
The Week Recommends Lucas Hnath's play stars Finn Cole as a 'reptilian' swimmer determined to win at all costs
By Irenie Forshaw, The Week UK Published
-
One Aldwych: where London's creative spirit takes centre stage
The Week Recommends This five-star Covent Garden hotel is the epitome of elegant independence
By Julia O'Driscoll, The Week UK Published
-
Charlotte Dujardin and equestrianism's dark side
In the Spotlight Olympic gold medallist and dressage star's suspension over horse whipping brings abuse in horse sports back into the spotlight
By Harriet Marsden, The Week UK Published
-
What financial impacts can you expect when the Fed finally cuts rates?
The Explainer The Federal Reserve is poised to slash interest rates in the coming months
By Becca Stanek, The Week US Published
-
When is pet insurance worth it?
The Explainer Decide if it makes more sense to brace for big vet bills or pay a regular premium
By Becca Stanek, The Week US Published
-
Should you fly or drive on your next trip? Here's how to decide.
The Explainer Make the best choice for your wallet
By Becca Stanek, The Week US Published
-
The midyear financial check-in: why it matters and what to review
The Explainer This year is halfway over. Have you checked your finances?
By Becca Stanek, The Week US Published
-
4 different budgeting methods — and how to choose one that works
The Explainer Pick something you'll actually stick to
By Becca Stanek, The Week US Published
-
4 tips to have fun this summer without breaking the bank
The Explainer Prices are climbing, so keep your wits about you
By Becca Stanek, The Week US Published
-
Zombie mortgages are on the rise again. Here's what to know about them.
The Explainer Second mortgages homeowners thought were settled can cause some serious problems
By Becca Stanek, The Week US Published
-
Should you try a 'no-spend' month?
The Explainer Set yourself up for success with spending less
By Becca Stanek, The Week US Published