The collective market capitalization of the seven leading U.S. technology companies, often referred to as the Magnificent Seven, has edged closer Monday to the staggering $13-trillion mark.
The elite cluster includes Apple Inc. (NASDAQ:AAPL), Microsoft Corp. (NYSE:MSFT), Alphabet Inc. (NASDAQ:GOOG) (NASDAQ:GOOGL), Amazon Inc. (NASDAQ:AMZN), Meta Platforms Inc. (NASDAQ:META), NVIDIA Corp. (NASDAQ:NVDA) and Tesla, Inc. (NASDAQ:TSLA). The group saw its combined worth surpass the total economic output of global cities such as New York, Tokyo, London, Los Angeles, London, Paris, Seoul, Chicago, San Francisco, Osaka and Shanghai, as highlighted by Michael Hartnett, Bank of America’s chief market strategist, in a recent note.
The stocks are now testing the “law of physics,” Bloomberg columnists John Authers and Isabelle Lee wrote on Monday. Ed Yardeni, a popular Wall Street industry veteran, said “the Mag-7 once again are sucking all the air out of the universe,” in a recent note addressing the spectacular jump of Meta Platforms.
Last Friday, the social media giant owned by Mark Zuckerberg made a historic $204-billion market value jump in a single day, the largest for any U.S. company ever.
| Name | Market Cap (bn) | Market Cap Change (5-day) (bn) | Total Revenues (FQ) (bn) | P/E (NTM) | Total Return (1Y) |
|---|---|---|---|---|---|
| Microsoft Corporation | $3,013.04 | -$31.03 | $62.02 | 33.2x | 58.35% |
| Apple Inc. | $2,908.02 | -$51.72 | $119.58 | 28.2x | 22.57% |
| Alphabet Inc. | $1,796.35 | -$112.76 | $86.31 | 21.4x | 37.92% |
| Amazon.com, Inc. | $1,767.52 | +$97.55 | $169.96 | 40.5x | 64.58% |
| NVIDIA Corporation | $1,698.69 | +$171.54 | $18.12 | 34.9x | 226.08% |
| Meta Platforms, Inc. | $1,186.75 | +$190.82 | $40.11 | 23.6x | 149.56% |
| Tesla, Inc. | $574.65 | -$31.59 | $25.17 | 56.4x | -5.02% |
| Total/Aggregate | $12,945.01 | +$232.81 | $521.26 | – | – |
| Average | – | – | – | 34x | 79% |
Mayday, Mayday, We Have A Concentration Problem
The impact of these tech giants extends well into the concentration of equity indices and investment portfolios.
A recent analysis by JPMorgan Chase & Co.’s team, led by Khuram Chaudhry, revealed the top 10 stocks of the MSCI USA Index, which includes the Magnificent Seven, constituted 29.3% of the index as of December. This concentration is alarmingly close to the 33.2% peak seen during the dot-com bubble’s peak in June 2000.
Furthermore, a Goldman Sachs report from late 2023…
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