If you follow the stock market closely, then you know about the “Magnificent 7” tech companies that hold an inordinate amount of the S&P 500’s market cap. The term was invented as recently as 2023, so there’s no shame in not having heard of this grouping before.
Bank of America chief investment strategist Michael Hartnett coined the term with a nod to the 1960 John Sturges Western, and it certainly resonated throughout the recent bull market. But there’s one thing Hartnett didn’t consider, and it’s starting to show now that share values are retrenching. In the movie, only two of the Magnificent 7 survive.
The lineup
Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla comprise the Mag 7. When Hartnett first lumped them together, they accounted for 20% of the S&P’s value. At the end of 2024 – that is, about the time the bull market ended – that figure exceeded 30%.
“I don’t think if you go back in history you can see a period of time where the top five, the top seven, the top 10 U.S. companies are so dominant,” Hartnett told the news outlet Marketplace.
It’s not surprising, then, that the Mag 7 accounted for most of the market index’s growth over those two years. Most dramatically, Nvidia’s share price almost tripled in 2023, then tripled in 2024. As of this writing, though, Nvidia is right around where it was 10 months ago.
What discussions of the Mag 7 often omit, though, is that there’s an investment theme beyond, “They’re techie … and they’re big!” These companies, despite being in the same industrial sector, are quite diverse. Alphabet runs the Google search engine and online suite. Amazon is as much an infrastructure provider as a retailer. Apple is a hardware brand. Microsoft is a software developer. Nvidia is a chip maker. Tesla may be high-tech but, ultimately, it’s part of the auto industry. So, what’s the common thread?
Artificial intelligence. Taken together, these seven companies serve as a barometer of investment in AI. Or at least, that was the theory.
Future tense
The public rarely adopts technology as quickly as the industry would have it. Television, fax machines, personal computers – we could have had each of them a decade or more before we actually opened the box. There was always the risk that AI would follow suit.
What nobody expected, though, was that the whole economy would slow – or possibly shrink –just as AI was gaining traction in the wider world.
Microsoft was the first to experience those headwinds and actually has negative trailing-twelve-month returns at the moment. After its share price dropped around 15% between November 2024 and April 2025, Microsoft killed a $1 billion AI project.
Can we talk – dispassionately – about Tesla? As of this writing, its share price is roughly half what it was four months ago. Certainly, the fundamentals haven’t changed so fast and so far. This devaluation has little to do with corporate earnings projections, industry factors or even the macroeconomic issues related to the inconsistencies of America’s current trade policies. And Tesla continues to offer new use cases for AI. None of that is the issue with Tesla; rather, this is what reputation risk looks like. The people most likely to buy electric vehicles are exactly the people Tesla CEO Elon Musk alienated with his activities in Washington. Whatever you think of the politics or policies involved, taking a literal chainsaw to government programs was a risky marketing move on Musk’s part.
Who lives to tell?
The Magnificent Seven was, as you probably know, a remake. It’s based on a 1954 Japanese classic, Seven Samurai. After a series of sequels, it then became a TV series and eventually recast for a 2017 update. Along the way, The Wild Bunch, The Dirty Dozen, Suicide Squad and dozens of other war-of-attrition movies have stolen the plot.
While you can’t kill a good story, you can most definitely kill an over-the-hill gunslinger. Will Microsoft and Tesla get back up on their feet, or are they destined for the boneyard? Should we prepare to bury any of the others (with their boots on, of course)?
Let’s remember that the Mag 7 is not an index. It’s a shorthand for exposure to AI innovation, and the risks and rewards thereof. Indexes can always swap out another stock for one that falls out of favor, or that drops in value too much to qualify for the applicable index based on market capitalization. The Mag 7’s relevance is a matter of a moment of time, and that time may well be over.
Once investors gain their confidence back, there’ll be another theme that analysts will try to push. And maybe some of the Mag 7 will emerge again as a part of that resurgence.
After all, the Mag 7 wasn’t the first posse Alphabet, Amazon and Meta ever rode with. The first was called the Dot Com Boom. Happy trails, GeoCities. Vaya con Dios, Pets.com.
If you need some objective guidance picking out who’s more likely to die with trail dust in their mouths and who’s going to ride off into the sunset, maybe you should call your Smith Anglin advisor.
