Magnificent 7 Performance Diverges

The Magnificent Seven's overall performance boosted markets last year, but individual trajectories in 2024 show this influential group splitting up.

Top Performers Driving Magnificent Seven

The Magnificent Seven stocks that powered many US indices to record highs last year have shown uneven performance in 2024. As individual companies continue down different growth trajectories, their collective influence on the market is evolving.

Nvidia has led the way year-to-date (YTD), with its price soaring over 87% as of mid-March. Meta sits in second place with growth of approximately 44% in the same period. On the other hand, Tesla has moved in the opposite direction, seeing its stock decline nearly 30%. Apple has also performed poorly, down 12% in 2024.

After averaging a return of 107%, Magnificent Seven results have diverged this year. Three are in negative territory, while four remain profitable, making a stronger case for a Magnificent Four. It remains to be seen if the leaders still hold significant growth potential. Apple faces challenges related to weaker iPhone sales in China, and Tesla rising competition from electric vehicle (EV) manufacturers, and difficulty meeting expectations.

Where is the Path Forward?

Despite the recent pullback of the worst-performing Magnificent Seven stocks, analysts see an opportunity offered at a reduced price. For example, ARK's Cathie Wood still anticipates gains for Tesla. However, Tesla customers are struggling with high inflation, and the increased cost of vehicle financing makes buying a new car less affordable. With inflation declining and lower interest rates potentially not occurring until H2, Tesla could experience pressure over the next few months.

As analysts expressed concern about the lack of participation across different market sectors, the question of whether gains can be broadened remains. So far, the trend has moved in the opposite direction as risk has consolidated among the Magnificent Four as artificial intelligence (AI) and software-based organisations, such as Nvidia, Meta and Amazon, have reached new highs. On the other hand, those relying on physical production, such as automobiles and mobile devices, have underperformed. Will this pattern persist throughout the rest of the year?

APPLE At Bottom of Range?

Apple's share price appears to have found support near the bottom of its range, with upward potential extending to $200. If the stock moves past $180, the probability of advancing to the peak will rise above $190. However, a breakdown below $165 could intensify selling pressure and drive the stock towards $150.

Key Takeaways

The so-called "Magnificent Seven" stocks have diverged in 2024. Nvidia, Meta, Amazon, and Microsoft have gained YTD, while Tesla, Apple, and Alphabet have been down. Physical goods companies like Tesla and Apple face headwinds from macroeconomic pressures, while AI and software firms like Nvidia and Meta have reached new highs. The breakup risks the market's gains and questions where strength will emerge for the rest of the year.​