For an average Indian household, gold remains an asset that is highly prized and is sold only when there is an emergency. Buying gold remains an achievement, based on the fact that the price will never depreciate, and will remain more or less in line with inflation.
For those who prefer to invest in stocks, some stocks are worth their weight in gold, just like your mom, who’d never consider selling them if she had a choice. Across the universe of stocks, seven stocks have become so precious that they’re worth more than the rest of the entire S&P 500 Index, with market cap values higher than the remaining 443 top US stocks in the index.
These seven stocks are Alphabet (Google’s parent), Amazon, Apple, Meta Platforms (Facebook’s parent), Microsoft, Nvidia and Tesla.
Why are they the Magnificent 7?
Besides being technology stocks, these have been called the Magnificent 7 mostly due to the strong gains they’ve delivered over the years, even as the broader market struggled due to economic uncertainty, rising interest rates or other challenges.
These companies are behind the most sought-after and widely used products across the world, Google Search, Amazon Web Services, Apple iPhones, Facebook, Windows Operating Systems, the pioneering EV cars from Tesla and most importantly, the manufacturer that makes the chips that power all of these services in one way or the other-Nvidia.
Currently, these stocks are valued at about $22 trillion, with most, excluding Amazon, offering five-year returns exceeding 100%, with Nvidia leading the pack at 1,400%. The main reason was their incredibly popular products, which have seen strong sales regardless of market conditions.
Why this may not last
Though there is nothing that can stop us from using Google Search or Microsoft Windows, not all of these companies can remain a part of the Magnificent 7; at least some will be replaced sooner or later. Their products may be aspirational or ubiquitous, but they cannot outlast the competition or market conditions. Let’s understand how these companies got here, and what could force them out of this select club.
Tesla
How it got there
The company was founded with a purpose- to disrupt the gasoline-based automobile industry with technologically superior, better-performing Electric Vehicles. Led by Elon Musk, Tesla developed pioneering technology, including Tesla Autopilot for unassisted driving, becoming one of the world’s most sought-after automobile brands.
The Peak
In 2013, the company launched the Model S Luxury Sedan, which became the best-selling car in the US for three years.
It became a trillion-dollar company in October 2021. By then, it had launched its other cars- Model X SUV, Model 3 and Model Y, all to thousands of pre-bookings but with production capabilities that didn’t match demand.
Challenges Faced
Despite Elon being the star behind the brand, Tesla hasn’t been able to keep up the momentum, especially since Chinese EV makers BYD and SAIC continue to gnaw at its market share, which has declined from 21% in 2021 to 18% in 2024, according to Statista.
Tesla’s market share has been declining in the US and in key markets in Europe and China, even as Elon Musk remains in the public glare, though not as the face of Tesla.
To address the competition, Tesla has now moved its focus to the mass market, with plans to launch an entry-level vehicle, along with plans to make upgraded versions of its current vehicle lineups. For Tesla, the biggest challenge would be to compete against BYD’s cost competitiveness, given that the Chinese company has overtaken Tesla as the world’s biggest EV maker on the back of its vertically integrated technology stack.
Amazon
How it got there
Amazon pioneered the e-commerce industry as we know it. From its inception in 1994 to date, Amazon has pipped Walmart as America’s leading retailer, with an almost 40% share of the US e-commerce market. It has expanded its brand to cloud storage services (Amazon Web Services-AWS) and entertainment. The company is known to not prioritize profit margins, rather, it has grown by reinvesting them for capital expenditures.
The Peak
The company became a household name by the 2010s, even as its AWS segment became the real money spinner. Soon after, Amazon expanded into various markets in Europe, China, Africa, and South America, becoming the twelfth-most-visited website in the world by 2022. The Jeff Bezos led company has expanded into various other sectors, including physical retail, but its online store and AWS remain the core business segments.
Challenges Faced
Amazon’s market leadership in Cloud services is under threat from Google Cloud and Microsoft Azure, requiring AWS to offer a differentiated solution to defend its market share. Walmart and other retailers have been using every trick in the trade to gain market share- predatory discounting, promotional offers and wider reach, even as Amazon’s ad revenues from its marketplace have grown pretty slowly.
Meta Platforms (Facebook’s parent)
How it got there
Started with Facebook as the world’s most popular social media site in 2004, Meta Platforms, as it is known now, has expanded its portfolio to other popular social media sites including Instagram, WhatsApp, Threads, and Messenger. The company’s rise has correlated to its popularity, helping it become a Big Tech company on the back of its highly filtered and targeted advertising opportunities.
The Peak
From a college dorm project by 2 Stanford students, Facebook started to become a sensation by 2006. Over the years, it acquired similar, but competing social media platforms- Instagram and WhatsApp, besides other acquisitions. The company, now worth $1.85 trillion, has grown on the back of its advertising revenue, especially as ads account for more than 95% of its revenues.
Challenges Faced
The company’s income is currently largely dependent on ad revenue. It has expanded beyond social media, to Virtual Reality and lately AI Superintelligence but these investments will need years to generate meaningful revenue. Facebook Founder Mark Zuckerberg is aggressively investing in its AI capabilities, but the timelines for delivering actionable products remain unclear. For now, the company’s primary revenue source from ads remains intact, with a serious disruption to its revenue remaining unlikely.
Alphabet (Google’s parent)
How it got there
As the holding company of Google and its related products- Search, Gmail, Chrome, Google Fibre, Wing, etc, the company has emerged as the largest tech company by profit. From Google Search, the company has expanded its brand to include everything we need today: Gmail, the Chrome browser, and, most recently, Gemini AI.
The Peak
Google’s products have become more than products- millions use them as mediums of communication or income. Its status as the world’s largest tech company was under threat with the introduction of ChatGPT in 2022, and it responded with the launch of AI-enabled search and Gemini AI a year later.
Currently, Alphabet has a consistent revenue record, reporting around $102.3 billion in revenues from various sources. Its ad revenue remains largely intact, despite AI search engines and bots eating into its traditional workhorse.
Challenges Faced
Though there are threats from competitors for its various products, there is no way the company can be replaced in the Magnificent 7, especially as AI’s limitations make it a research assistant, not a replaceable assistant. With Gemini AI being widely adopted, Google has an opportunity to monetise this, with the Sundar Pichai-led company leading the tech race, with all internet users continuing to believe in the company.
Apple
How it got there
Apple, under the legendary Steve Jobs, has been known for its pioneering technological advancements and its highly sought-after ecosystem of devices. It has more or less remained the of the worlds most valuable companies, mostly on the back of its aspirational, exclusive iPhone, Mac and other products whose demand has remained largely consistent over the years.
The Peak
The company is known for designing and innovating everything in-house, with its unique iOS operating system running exclusively on its devices. Since its launch in 2007, the iPhone has been one of the world’s most sought-after products, with almost 3 billion sold since. Even after 18 years, demand for the iPhone remains at its highest.
Challenges Faced
Though Apple still commands a dominant 18% of the global smartphone market, it hasn’t yet embraced AI across its product line. The company’s biggest strength is its customer loyalty, but it will have to integrate AI into its product range to maintain it.
Microsoft
How it got there
Microsoft offered the first desktop operating systems and has subsequently got almost 70% of the total desktop Operating Systems share in the world. The company also owns brands like LinkedIn, GitHub and Microsoft Gaming, largely through strategic acquisitions. Besides that, the company’s Office productivity suite, Playstation gaming consoles and Azure cloud enterprise storage systems have been its most prominent brands, earning itself a place as the leading tech company in the world.
The Peak
The company has become synonymous with desktop operating systems through its Windows OS. The technology giant has competed with Apple and, lately, with Nvidia to become the world’s most valuable listed company. The company faced some challenges over the past decade, but its fortunes have improved under current CEO Satya Nadella. As a leading investor in OpenAI, the company behind ChatGPT, Microsoft has been one of the leading adopters of AI-led technologies in its services.
Challenges Faced
This software provider has a fairly wide moat, especially for its hugely popular and popular Windows Operating Systems. The familiarity developed has helped it address competition in the cloud computing and enterprise software space, but the threat to its dominance will only depend on how well it upgrades its technologies to meet ever-changing demands.
Nvidia
How it got there
Once being a rather unknown company making high-performance graphic chips for gaming, Nvidia is the only company today that can manufacture highly complex AI chips for data centers. Following the AI boom, Nvidia has become the newest member of the Magnificent 7, and has now pipped Apple and Google to become the world’s most valuable company, worth $5 billion.
The Peak
Currently, Nvidia remains the moon amongst the galaxy of leading MNCs. Though it doesn’t sell its products directly to the customers, Google, Amazon, Apple, Tesla, and Meta Platforms depend on it in one way or another for the backend infrastructure for their services. Nvidia remains the core company that allows the AI infrastructure to run the way it is.
Challenges Faced
Currently, Nvidia remains the poster boy of the tech world, with practically no other company capable of matching its AI chips that data centres and countries compete to buy.
Until someone matches or surpasses Nvidia’s chip dominance, the company will likely be the longest-running member of the Maginificient 7.
