Will the dominance of the Magnificent 7 persist in 2024?

Key Points

• The "Magnificent Seven" significantly influenced market gains in 2023.
• The Magnificent Seven stocks collectively hold nearly 28% of the SPDR S&P 500 ETF Trust's (NYSE: SPY) total weighting, significantly influencing its performance.
• In 2024, dominance has concentrated on a few Magnificent Seven members, with others underperforming the overall market.

Since the beginning of last year, several companies have shone as beacons of innovation and growth. These giants, now well-known as the "Magnificent Seven," have captivated investors with their impressive track records, unbelievable stock performance, and visionary strategies. 

Now, as 2024 is well and truly underway, it's time to peel back the curtain and examine how these exceptional companies have performed year-to-date and whether or not that theme remains intact. 

The extent to which these powerhouses influenced the market’s gains last year was remarkable. So the question for 2024 is, will that dominance persist? Or might it only survive in a handful of the Magnificent Seven stocks while other members lose their influence? Let’s look at how the year has shaped up so far for the seven members.

Magnificent 7’s dominance persists

The SPDR S&P 500 ETF Trust NYSE: SPY, a reliable benchmark for the overall U.S. stock market, is dominated by the magnificent seven. The ETF’s top seven holdings are the seven members, which comprise a total combined weighting of almost 28%. 

So, a quick guide to assessing whether the theme of 2023 remains so far in 2024 could be to gauge the market's overall performance. Impressively, year-to-date, the market is already up almost 5%, with the popular ETF trading at all-time highs and fast approaching the elusive $500 mark.

Notably, however, unlike 2023, this year's dominance has further concentrated in just a few of the seven members, with other members underperforming. 

Here’s what you should know about each one:

Meta Platforms NASDAQ: META

Shifting from a social media focus to constructing the metaverse, the company rebranded from Facebook to Meta Platforms in 2021. Following its remarkable rebound last year and triple-digit gains, the stock is up 33% year-to-date. The sentiment continues to grow bullish surrounding the stock, as it is Top-Rated, Upgraded, and one of the most followed names. Meta has a Moderate Buy rating and price target forecasting an almost 5% upside. 

Nvidia NASDAQ: NVDA

Nvidia specializes in top-tier graphics and mobile processors for various devices. Among the Magnificent Seven, its exceptional performance shines, boasting an impressive 212% gain over the previous year and already 41% gain year-to-date. This is an outstanding achievement, considering its market capitalization now stands at $1.72 trillion. Analysts are bullish on the stock, placing a moderate buy rating. However, the stock might be entering overbought territory as the consensus price target is now 11.5% below the current price of NVDA.

Microsoft NASDAQ: MSFT

Microsoft, the world's largest software company, is renowned for Windows, Azure cloud services, LinkedIn, Office suite, and Xbox gaming. In 2023, its acquisition of Activision Blizzard and innovative AI developments with OpenAI garnered significant attention. Year-to-date, the software giant is already up double-digits, over 10%, and has projected earnings growth of 13.10%. The stock is a Top-Rated and one of the Most-Upgraded names, possessing a strong dividend. 

Apple NASDAQ: AAPL

Apple has fallen short of the mark year-to-date, with shares down just over 2%. Microsoft has also overtaken the company as the world's most valuable company. The company’s rating of Moderate Buy is greater than that of the S&P 500’s Hold rating. Additionally, analysts have given the stock a consensus price target of $205.72, forecasting an upside of over 9%. 

Amazon.com NASDAQ: AMZN

Amazon is a major global player in online retail, cloud services, and digital entertainment. Thanks to an impressive earnings beat, Amazon has surged by almost 12% year-to-date. Notably, analysts forecast a significant upside for the stock despite its impressive yearly gains. The consensus price target of $197.95 sees a nearly 17% upside.

Tesla NASDAQ: TSLA

Tesla pioneers electric vehicles, driver assistance tech, and renewable energy goods. Dominating U.S. EV sales, it's helmed by the charismatic CEO Elon Musk. Year-to-date shares of the EV maker have taken a hit, down over 23%, and face growing pressure of no longer being a part of the so-called mag seven, with Berkshire Hathaway NYSE: BRK.B potentially next-in-line as it's the eighth largest holding in the SPY ETF, after Tesla. 

Alphabet NASDAQ: GOOGL

Holding over 90% of the global search market, Alphabet leads in online search. Additionally, Google's Bard AI chatbot competes prominently with ChatGPT. Like many above, Alphabet is favored among analysts, who have placed a moderate buy rating on the stock and called for over 5% upside. With a modest P/E of 25.16 and projected earnings growth of almost 15% for the full year, shares of Alphabet may play catch up to some of those mentioned above year-to-date high flyers.