The Dominance of the “Magnificent Seven”

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A remarkable trend has emerged in the global equity market, where a group of seven U.S. companies has surpassed the combined value of the equity markets of Canada, Japan, and the U.K. This group, aptly named “the Magnificent Seven,” comprises some of the most valuable publicly-traded companies in the United States.

According to Apollo economist Torsten Slok, Microsoft Corp., with its market capitalization of approximately $2.8 trillion, holds a position comparable in worth to the entire Canadian stock market. In fact, Microsoft is the second-most valuable U.S. stock, just behind Apple Inc.

Impressively, Microsoft shares have seen a 2% increase since the beginning of this year and have proven to be one of the top performers among other mega-cap technology stocks.

While the significant disparity between the Magnificent Seven and the rest of the market had drawn substantial attention from investment analysts in 2023, there has been a slight easing of this divergence over the past two months.

The ratio between the valuation of the Magnificent Seven and that of the entire Russell 2000 (RUT) has decreased from its peak reached last fall. This can be attributed in large part to a rally in small-cap stocks that has propelled the Russell 2000 by nearly 19% since November 1, as per FactSet data.

The dominance of these seven U.S. companies is undeniable, shaping the landscape of the global equity market and capturing the fascination of investors worldwide.

The Magnificent Seven Dominates the Market

The Magnificent Seven, a group of seven influential companies, boasts an impressive aggregate market capitalization of nearly $12 trillion. To put this into perspective, it is roughly four times the value of the entire Russell 2000, which encompasses 2,000 small-cap companies.

Performance Overview

While the performance of the Magnificent Seven has been a mixed bag since the start of the year, each member holds a significant position in the market. Let’s take a closer look at their individual performances:

  1. Tesla Inc. (TSLA): Unfortunately, Tesla is the worst performer within the group, with its shares falling 5.7% in 2024 so far.

  2. Apple Inc. (AAPL): Following analyst downgrades, Apple is down 4.2% in value.

  3. Nvidia Corp. (NVDA): The chip maker and artificial-intelligence pioneer, Nvidia, stands out with an impressive growth of 9.3% in its shares.

  4. Meta Platforms (META): As the owner of Facebook, Meta Platforms has experienced a modest uptick of 1.3% in 2024.

  5. Alphabet Inc. (GOOGL): The Class A shares of Alphabet have gained 0.8%.

  6. Inc. (AMZN): Amazon has seen a minor dip of 0.6% in its value.

  7. Microsoft (MSFT): Microsoft stands tall with a 2% increase.

Market Dominance

Each member of the Magnificent Seven holds a prominent position as one of the top 10 most valuable companies within the S&P 500 index. However, Berkshire Hathaway recently surpassed Tesla as the seventh-most valuable company in the index.

These influential companies continue to shape and dominate the market, leaving an indelible mark on the world of business and technology.

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