Editor’s Note: For years, the “Magnificent Seven” stocks were the best stocks money could buy. They averaged nearly 17,000% gains over the last 20 years.
However, Big Tech led the market lower during the sell-off earlier this year… and while these companies have since seen a strong rebound, the overall group is still down year to date.
That means the chance to capture growth and get rich from these amazing companies might be gone.
BUT a new set of AI stocks could be set up to take over.
Dubbed “the Next Magnificent Seven,” these companies are leveraging the explosion in AI to do things no companies have ever done before.
Get more details on the Next Magnificent Seven here.
– James Ogletree, Managing Editor
It’s always worth checking in on the Magnificent Seven…
That’s because the group of seven behemoth tech and AI-related companies have contributed massively to the market’s rise over the past decade. They were responsible for 55% of the total return of the S&P 500 in 2024 alone.
Whatever direction this group has gone in recent years, the broader market has followed.
The name “Magnificent Seven” was coined a couple of years ago by Bank of America analyst Michael Hartnett. It’s a cool-kid reference to the 1960 film of that name that had stars galore, including Yul Brynner, Steve McQueen, and Charles Bronson.
The companies included in the group are:
- Microsoft (Nasdaq: MSFT)
- Amazon (Nasdaq: AMZN)
- Meta Platforms (Nasdaq: META)
- Apple (Nasdaq: AAPL)
- Alphabet (Nasdaq: GOOGL)
- Nvidia (Nasdaq: NVDA)
- Tesla (Nasdaq: TSLA).
Yes, the group includes some very large household names. And they’re all great companies.
But the increases in their stock prices have slowed down a bit over the past year. That’s partly because their valuations have become very rich (i.e., most of the stocks are now expensive relative to the earnings they’re expected to generate).
Also, a few have had some idiosyncratic problems…
For example, Tesla is down 13% year to date. That’s partly because its famous founder, Elon Musk, was seen by many investors to be neglecting the EV car manufacturer after being associated with President Donald Trump and the Department of Government Efficiency this year.
And iPhone and computer maker Apple has suffered in recent months – it’s down 19% year to date – due to fears about what tariffs could do to the company. Plus, rising tensions over moving iPhone production back to the U.S. from Asia are making it unclear what the repercussions will be for the stock from that.
So while the Magnificent Seven were up strongly in 2024, a huge swoon this year erased much of the gain. Here’s the one-year chart of the group’s combined stock price…
The Next Seven
But there’s another group of tech and AI-related companies that Oxford Club Chief Investment Strategist Alexander Green identified a little more than a year ago, which he calls “the Next Magnificent Seven.”
These are smaller and less well-known companies that have the potential to eventually rival the original Magnificent Seven.
Our research team at the Club recently did some computing to see how the returns of the two groups of stocks compare. Here are the results…
Over the past year, the original Mag Seven stocks posted an average return of about 22%. Not bad, considering the broader S&P 500 returned nearly half of that over the same period.
But the Next Magnificent Seven group returns blew those away. The average return of these seven stocks over the past year is about 84%. That’s eight times the S&P 500’s return and almost four times the return of the original Magnificent Seven.
Trees don’t grow to the sky, an old Wall Street saying has it. That is, once companies get as big as Apple and Nvidia, it’s difficult for them to continue growing at the same torrid pace. At various points, the six largest publicly traded companies by market cap have been in the Magnificent Seven.
That said, AI and its implementation remain in an infant stage, so there is likely much growth still to be had for all AI-related companies.
All smart investors will want to have a stake in this exciting new group of firms. And right now, you can basically still get in on the ground floor.
If you’re interested in “the Next Magnificent Seven” – the relatively unknown AI super-stocks that Alex expects will dominate the markets going forward – click here to learn more.