These Seven Tech Stocks Are Driving the Market (2024)

By Karl Russell and Joe Rennison Jan. 22, 2024

The S&P 500 is at a new high, and investors have just a handful of stocks to thank for it.

These Seven Tech Stocks Are Driving the Market (1)

These Seven Tech Stocks Are Driving the Market (2)

Since the index hit its latest low in October 2022, seven stocks — Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla — have collectively risen nearly 117 percent, far outpacing the performance of the other 493 companies in the S&P 500. Together, these stocks have become known as the “Magnificent Seven.”

But it’s not just the stellar price performance of these stocks that helped lift the S&P 500 to a closing record on Friday. The stock index is weighted by market capitalization, meaning the moves of the largest companies contribute more to the performance of the index. In other words, the influence of these seven stocks comes down to their size. Their market value has risen more than 60 percent since October 2022.

These Seven Tech Stocks Are Driving the Market (4)

These Seven Tech Stocks Are Driving the Market (5)

The outsize impact of the Magnificent Seven can work both ways. During the later months of 2022, their relatively weak showing dragged the S&P 500 down. Over the last twelve months, their gains have accounted for more than 60 percent of the return in the S&P 500. Tesla remains lower than it was when the S&P hit its trough in October 2022, but over the last twelve months, the company has surged more than 64 percent, responsible for nearly 3 percent of the S&P 500 rally on its own.

Indeed, based on price alone, the seven big tech stocks were not the best performing in the S&P 500. Royal Caribbean, the cruise line, rose 212 percent, for example, and General Electric has risen over 160 percent since October 2022. However, these companies hold less weight in the index because they are much smaller, and each is responsible for less than 1 percent of the index’s move since then.

And some of the Magnificent Seven have done better than others. Nvidia, the chipmaker, rose a startling 417 percent, while Amazon gained just 38 percent. Microsoft has risen about 79 percent since the S&P’s low, but because it’s the largest stock in the index, its move still outweighed Meta’s 198 percent gain over the same period.

These Seven Tech Stocks Are Driving the Market (7)

These Seven Tech Stocks Are Driving the Market (8)

Understanding the dominance of Big Tech on the S&P 500 is important for understanding the signal the index is sending about the market, companies and the economy. A rising S&P 500 is usually seen as a good thing, but when an index is led higher by just a small number of companies, it can mask turbulence beneath the surface. In other words, the index can rise even when a majority of companies fall.

This has always been the case. In the 1980s, companies like IBM, Exxon and General Electric dominated, but never quite to the degree that the new breed of tech behemoths has in recent years.

Last March, a crisis among the nation’s banks sent many individual stock prices tumbling. But the S&P 500 finished the month 3 percent higher, largely because of the furor surrounding advancements in artificial intelligence and what they could mean for the tech giants’ profitability.

This dynamic has begun to subside in recent months, as more companies have joined the rally. More than half the companies in the index are higher than they were when the S&P reached its previous peak in January 2022.

Some analysts say this is a sign that the rally has more room to run as those stocks that have lagged behind begin to catch up, bolstered by greater optimism over the outlook for the economy.

Others warn that it may simply be the rise before a fall, especially as the economy continues to slow, weighing on those same companies.

These Seven Tech Stocks Are Driving the Market (2024)

FAQs

What are the seven stocks driving the market? ›

Much of the returns in the broad market have come from the stocks known as the Magnificent Seven: Nvidia NVDA, Meta Platforms META, Apple AAPL, Amazon.com AMZN, Microsoft MSFT, Alphabet GOOGL/GOOG, and Tesla TSLA. Over the past year, the group has been responsible for 33% of the market's rally.

What are the 7 Wonder stocks? ›

Dubbed the Magnificent Seven stocks, Apple, Microsoft, Google parent Alphabet, Amazon, Nvidia, Meta Platforms and Tesla lived up to their name in 2023 with big gains. But the middle part of the second quarter of 2024 showed a big divergence of returns.

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Who are the 7 tech giants? ›

UPDATED: Here's what our analysts thought of Tesla, Meta, Alphabet, Apple, Amazon and Microsoft reports. The majority of the 'Magnificent Seven' US tech stocks have reported their first quarter earnings. Nvidia (NVDA) will report later in May.

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What are the top 7 tech companies? ›

The recent dominance of Meta, Microsoft and Nvidia, along with Apple, Alphabet, Amazon, and Tesla – the so-called Magnificent Seven tech stocks – is indicative of “a fundamental shift”, primarily propelled by advancements in AI.

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What is the Big 7 in the US market? ›

Executive summary: The Magnificent Seven stocks (Microsoft, Apple, Alphabet, Amazon, Nvidia, Meta, and Tesla) have been the largest driver of equity returns in recent years and were again the dominant contributors in 2023, accounting for more than half of the market increase.

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What 7 stocks are driving the S&P 500? ›

Big-Tech Behemoths Hold Sway Over Indices

However, 2023 was quite impressive for the seven tech-focused US companies—Alphabet, Amazon, Apple, Meta Platforms, Microsoft, NVIDIA and Tesla. Collectively, the Magnificent Seven climbed 75.71% during 2023, while the broader S&P 500® Index returned 24.23% for the year.

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What tech stock does Warren Buffett own? ›

Buffett and NEAM also own a handful of legacy tech stocks, companies that have been around for decades and show staying power. These include Cisco Systems, with a $217 billion market cap, IBM, VeriSign, HP, Texas Instruments, and Activision Blizzard.

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What are the 5 star stocks? ›

Five-star stocks, should offer an investor a return that's higher than the company's cost of equity. Low-rated stocks have significantly lower expected returns. Three-star stocks are those that should offer a "fair return," one that adequately compensates for the riskiness of the stock.

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Who is the oldest tech giant? ›

Conclusion: In the race to determine which tech giant was founded first, IBM takes the crown as the oldest, with its establishment in 1911. HP followed suit in 1939, while Microsoft arrived on the scene in 1975. Apple joined the ranks in 1976, and Google emerged relatively later, in 1998.

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Which of these tech giants is the biggest by market value? ›

As of March 26, 2024, Microsoft was the leading tech company by market capitalization globally at 3.14 trillion U.S. dollars. Apple ranked second, totaling around 2.64 trillion U.S. dollars in market capitalization. Nvidia, Alphabet (Google), and Amazon made up the rest of the top five.

What 7 companies are carrying the S&P 500? ›

In fact, as it turns out, the S&P 500's impressive performance is actually thanks almost entirely to just a handful of stocks: "the Magnificent Seven," as they are referred to on Wall Street. Together, Apple, Amazon, Alphabet, NVIDIA, Meta, Microsoft, and Tesla are up around 70% year to date.

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Which magnificent 7 stocks pay dividends? ›

Dividends make Apple, Microsoft, and Nvidia even sweeter

Microsoft has the best dividend yield: $0.75 per share each quarter, which translates to an annual yield of 0.74%. Holding Apple stock will yield 0.49% annually, whereas Nvidia stock yields 0.03%.

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What is the biggest driver of the stock market? ›

Kristen Bitterly, head of investment solutions at Citi Global Wealth, joins 'Closing Bell' to discuss the market rally's staying power, earnings power, and more.

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Is there a magnificent 7 ETF? ›

MAGS began trading on April 11, 2023 as the Roundhill BIG Tech ETF. The Fund's name changed on November 9, 2023 to the Roundhill Magnificent Seven ETF.