The divergence in fortunes is largely due to the rise of AI, with companies like Nvidia and Meta being seen as part of the AI trade. Nvidia, for example, has seen its stock rise 66% this year, while Tesla's stock is down 22%. Apple and Tesla are also more exposed to China, which is facing economic challenges. The "Magnificent Seven" label may not be retired, but a rebranding might be likely as the group continues to see diverging performances. Dan Niles from the Satori Fund suggested the group should be trimmed to Nvidia, Meta, Amazon, and Microsoft, or the "Fantastic Four".
Key takeaways:
- The dominance of the "Magnificent Seven" mega-cap giants (Apple, Meta Platforms, Nvidia, Tesla, Amazon, and Microsoft) over the stock market is reportedly coming to an end, according to Mike O'Rourke, chief market strategist from Jones Trading.
- The fortunes of these companies are diverging, with some like Nvidia and Meta seeing significant growth due to their involvement in AI, while others like Tesla and Apple are struggling.
- One of the reasons for this divergence is the companies' different levels of involvement in AI. Nvidia and Meta are seen as key players in the AI trade, while Tesla, despite its aspirations, is still primarily seen as a car manufacturer.
- There are suggestions that the "Magnificent Seven" label might be rebranded to the "Fantastic Four" (Nvidia, Meta, Amazon, and Microsoft), as these companies are currently outperforming the others.