Big tech stocks, in particular the ‘Magnificent Seven’, have dominated the stock market for over two years, but their share prices have become highly volatile as Donald Trump’s tariffs threaten to upend the established economic order.
At the start of 2023, seven tech companies accounted for approximately a fifth of the S&P 500 between them. Two years on – having been constantly among the most-bought stocks in the world ever since – the group, dubbed the ‘Magnificent Seven’, now comprises over 30% of the S&P 500 index.
This saturation means that, in effect, all investors are exposed to these big tech stocks. Whether or not you own them directly, any stock market tracker funds, the likes of which will likely form a large part of your pension, will have significant exposure to the Magnificent Seven group.
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Stock markets nosedived during April thanks to Trump’s ‘Liberation Day’ tariffs. As some of the pricier offerings in the stock market, the Magnificent Seven initially bore the brunt of this selloff.
“The mass confusion created by this constant news flow out of the White House is dizzying for the industry and investors,” says Dan Ives, global head of technology research at Wedbush Securities, “creating massive uncertainty and chaos for companies trying to plan their supply chain, inventory, and demand.”
The companies themselves had the opportunity to hit back at the pessimism over the last two weeks during Magnificent Seven earnings season. Six of the group – all apart from Nvidia – announced their earnings results, and on the whole they were able to post results, guidance and commentary that reassured investors.
One flatlined, though, and another has fallen off substantially given fears about how an escalating trade war will impact their business.
Should you be worried about increased volatility in the Magnificent Seven over recent weeks? Is this just a flash in the pan – or is the AI boom bursting like the dotcom bubble did twenty-five years ago?
What are the Magnificent Seven stocks?
The Magnificent Seven – often abbreviated to ‘Mag7’ – comprises seven big tech stocks that the investing community perceives as being the leading exponents of technology in general and artificial intelligence (AI) in particular.
They are:
- Alphabet (NASDAQ:GOOGL) – the parent company of Google, as well as other companies such as the AI developers DeepMind and Anthropic;
- Amazon (NASDAQ:AMZN) – originally an online bookstore, now a giant of e-commerce and, via Amazon Web Services (AWS), cloud computing;
- Apple (NASDAQ:AAPL) – the tech hardware company that brought the world the MacBook and the iPhone;
- Meta (NASDAQ:META) – formerly Facebook, the company is now heavily focused on ‘Metaverse’ technology as well as AI products, like Llama model;
- Microsoft (NASDAQ:MSFT) – the computing giant behind the Windows operating system and the Azure cloud platform;
- Nvidia (NASDAQ:NVDA) – the hardware developer that pioneered GPUs, the chips that power AI data centres;
- Tesla (NASDAQ:TSLA) – the electric vehicle (EV) manufacturer that, according to CEO Elon Musk, is aiming to crack autonomous driving.
The term ‘Magnificent Seven’ was coined by Bank of America analyst Michael Hartnett in 2023. By then, the group was already starting to dominate the stock market in the wake of the AI and tech stock mania that followed the public launch of ChatGPT in late November 2022.
While each company is distinct, there are some general similarities that apply to most, if not all, of the group.
All are (or at least have been) incredibly innovative; Apple’s products have revolutionised personal computing, Meta made social media mainstream, and Tesla has demonstrated the viability of EVs.
Most are also highly diversified. Even if a specific product made a company like Meta or Amazon famous, these megacap companies now have their fingers in all sorts of technological pies – favourites being cloud computing and, of course, AI.
All the companies in the group are involved in AI, albeit in different ways and to varying degrees (Apple, for example, has drawn criticism for failing to develop its own AI products as fast as its counterparts).
Their key similarity, though, is their stock market dominance. At the time of writing, they comprise seven of the world’s eleven largest companies by market capitalisation. All except Tesla have a market cap of over $1 trillion (Tesla’s has fallen from $1.4 trillion at the end of December to $902.7 billion at the time of writing).
Latest Magnificent Seven News
Six of the Magnificent Seven stocks announced their earnings reports in late April and early May. The timetable of these releases is below. All companies announced their earnings after markets closed on the date specified, and the share price changes reflect the difference in price between market close on the day the company announced its earnings, and its opening price the following day.
Company | Earnings date | Share price change |
Tesla | 22/04/2025 | 7.1% |
Alphabet | 24/04/2025 | 3.6% |
Meta | 30/04/2025 | 7.8% |
Microsoft | 30/04/2025 | 9.1% |
Amazon | 01/05/2025 | 0.7% |
Apple | 01/05/2025 | -3.4% |
Nvidia is the only one of the group yet to announce its results for the first quarter of the 2025 calendar year (Nvidia’s 2026 financial year) - this release is scheduled for 28 May.
Four of the stocks made substantial gains immediately after their earnings, with Microsoft having particularly impressed investors. Amazon, though, saw a muted reception, while Apple fell.
Below, we explore the reason for these Magnificent Seven share price reactions, in the context of each company’s earnings release and the broader economic picture.
Alphabet
Year-over-year Google Cloud revenue growth of 28% and an earnings and revenue beat were enough to convince investors that Alphabet is on a solid footing.
Concerns linger over a potential breakup of Google, though. The US Department of Justice (DOJ) is pushing for Google to divest the Chrome browser and parts of its advertising technology (adtech) infrastructure, with a judge having ruled in August last year that Google has illegally monopolised the online search market.
On 3 May, Reuters reported that Google will face a trial in September on possible remedies to recent rulings on its adtech business.
Despite concerns that generative AI search could eat into the efficacy and popularity of Google Search, still the core of Alphabet’s business despite its fast-growing cloud arm, the division posted solid year-over-year growth of 9.8% in Alphabet’s earnings release.
With the tariff regime on computing products in flux, it would be understandable for big tech companies to take a conservative approach to capital expenditure predictions.
Alphabet has bucked that trend, with CEO Sundar Pichai reaffirming the company’s commitment to spending $75 billion this year to expand its data centre capacity.
“The opportunity with AI is as big as it gets,” Pichai said at Google Cloud Next 25. “That’s why we are investing in the full stack of AI innovation”.
Amazon
Amazon beat analysts’ earnings estimates, with earnings per share (EPS) rising 62% to $1.59. The stock fell in after-hours trading nonetheless. Its cloud division, Amazon Web Services (AWS) slightly missed expectations and grew slower than Google and Microsoft’s cloud arms during the same period.
The tariff situation weighs heavily on Amazon, though, given the globally diversified nature of its core e-commerce business.
“While the company delivered a strong profit beat in the quarter, guidance for 2Q growth and operating income were mixed, as management contemplates a broader range of outcomes given macro uncertainty and the potential tariff implications on the business,” says Scott Devitt, managing director at Wedbush Securities.
While Devitt believes that “there is some conservatism embedded in management’s outlook”, markets are clearly cautious about piling into Amazon stock while the implications of the trade war for the company remain uncertain.
Apple
Apple announced its results on the same day as Amazon and was hit harder by the same macro headwinds.
The challenge for Apple is that its iPhone is almost entirely manufactured in China. The 145% tariffs on imports to the US from the country could, in some experts’ opinion, increase the cost of an iPhone to as much as $2,300; CEO Tim Cook told analysts during Apple’s earnings call that the tariffs in their current form could add $900 million to Apple’s costs during Q2.
Apple’s shares slid further on 5 May, and have fallen 11.2% since 2 April when the tariff regime was announced.
Read more about the biggest winners and losers from Trump’s tariff announcements here.
Meta
The only real headwind that tariffs pose to Meta is a potential slowdown in ad spend from big customers like Shein. Even if that comes about, many observers feel that Meta is relatively well-positioned to absorb any impacts.
Add to that an earnings beat and a 27% increase in operating income and it’s clear to see why investors were keen on Meta’s shares following its results.
AI optimism was another highlight for the company. Capital expenditure (capex) projections for the year were raised from $60-65 billion to $64-72 billion, and CEO Mark Zuckerberg outlined the ways in which AI can revolutionise Meta’s advertising business during the earnings call.
Microsoft
Microsoft was the biggest winner in terms of immediate share price reaction.
The company posted EPS of $3.46 beating analyst expectations of $3.22, and revenue increased by 13% to $70.1 billion, ahead of the $68.4 billion analysts had forecast.
Revenue from Azure, its cloud computing arm, increased 33% year-over-year, and increasing AI demand underpinned strong guidance numbers for the next quarter.
Microsoft’s post-earnings gains, combined with Apple’s declines, mean that it has regained the title of the world’s most valuable company, with a market cap of $3.24 trillion as of markets close on 5 May.
Nvidia
We have the best part of a month to wait before Nvidia unveils its results for the equivalent period.
However, its shares have performed well as the other Magnificent Seven companies announce their results. Nvidia stock gained 15.1% between 22 April and 5 May, outperforming the S&P 500 which gained 6.9% in the same period.
Nvidia shares tend to rise whenever the likes of Microsoft and Meta promise to spend big on AI, given that Nvidia supplies the leading hardware underpinning the technology.
Tesla
While investors had already priced in a dismal quarter financially following an earlier delivery numbers announcement, Tesla shares initially fell when it announced an earnings and revenue miss.
However, the direction of travel reversed course when CEO Elon Musk announced during the earnings call that he would be stepping back from his work at the Department of Government Efficiency (DOGE) to concentrate more fully on Tesla.
The Wall Street Journal (WSJ)has since reported that the Tesla board had begun approaching headhunting firms to seek a replacement for the controversial CEO around one month ago. Tesla’s chair Robyn Denholm denied the reports in a post on X hours after the WSJ published the story.
Is now the time to buy the Magnificent Seven?
Earnings season often prompts a shake-up in market perceptions and valuations of these stocks. Does that mean now could be the time to buy them?
The answer of course depends on your personal circumstances, investment goals, and risk appetite, but before investing in big tech stocks it is worth remembering that their oversaturation in the stock market and strained valuations mean that they are relatively risky investments, despite the fact that they are big, established and highly profitable businesses.
The table below shows the price of these stocks relative to their earnings over the last 12 months (trailing) and analysts’ projections for the next 12 (forward).
Stock | Trailing P/E ratio | Forward P/E ratio |
|---|---|---|
Alphabet* | 18.33 | 17.80 |
Amazon* | 30.36 | 29.22 |
Apple* | 31.08 | 27.40 |
Meta* | 23.42 | 23.77 |
Microsoft* | 33.71 | 30.27 |
Nvidia* | 38.71 | 25.80 |
Tesla* | 160.35 | 132.05 |
S&P 500 average^ | 22.56 | 21.10 |
NASDAQ 100 average^ | 29.25 | 25.37 |
Sources: *Wall Street analyst estimates via stockanalysis.com as of 5 May 2025, ^Birinyi Associates analysis via Wall Street Journal as of 2 May 2025,
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