Is the Magnificent Seven No More?
The once-dominant Magnificent Seven stocks are losing their shine in 2024.
Meta Platforms (META) became the last of the Big Tech giants to slip into negative territory for the year. The rest—Apple (AAPL), Microsoft (MSFT), Nvidia (NVDA), Alphabet (GOOG), Amazon (AMZN), and Tesla (TSLA)—have seen declines ranging from 8% to 42% as of Wednesday’s close.
These seven companies have driven the U.S. stock market since late 2022, when cooling inflation and the rise of OpenAI’s ChatGPT ignited an AI-fueled rally. The Magnificent Seven accounted for more than 50% of the S&P 500’s gains in 2023 and 2024, helping push the index up more than 20% in each of those years—its first such streak since the 1990s.
A Warning for the Markets
Market experts have long cautioned that the narrow bull market led by these tech giants was unsustainable. Now, their struggles are weighing heavily on the broader stock market. Since the start of the year:
- The Magnificent Seven stocks have fallen nearly 15%.
- The S&P 500 is down about 4%.
- The equal-weighted S&P 500 is down less than 1%.
The Correction: A Shift in Market Leadership?
The Magnificent Seven officially fell into correction territory at the end of February, weeks before the S&P 500 followed suit. Meanwhile, the equal-weighted S&P 500 has remained more resilient, avoiding a correction as of Wednesday’s close.
“So when we think about the US market falls this year, I would say sentiment changes towards the Mag-7 are a bigger impact domestically than the trade headlines, even if both matter,” wrote Deutsche Bank analyst Jim Reid in a note on Wednesday.
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The Magnificent Seven have been hit particularly hard by mounting uncertainty on Wall Street and Main Street. A shockwave was sent through the sector in late January when Chinese startup DeepSeek released an unexpectedly powerful open-source AI model, prompting a sell-off. Ongoing fears over the economic impact of President Donald Trump’s tariffs have only added to the pressure.
The Future of the Magnificent Seven: Cause for Concern?
The struggles of the Magnificent Seven could signal a fundamental shift in market leadership. For years, these tech giants drove stock market gains almost single-handedly. Now, their declines raise questions about whether the broader market can thrive without them.
A key concern is whether AI-driven growth was overestimated or if investors are simply rotating into other sectors. If the decline continues, it could trigger a more significant market downturn, as many institutional portfolios remain heavily invested in these stocks. Additionally, geopolitical risks and regulatory scrutiny could further hinder their performance.
For investors, this moment represents a turning point—is this just a short-term setback, or are we witnessing the end of an era? Either way, the Magnificent Seven no longer look quite so magnificent.
