From Nasdaq, Inc.:

The Nasdaq Composite surged 44% in 2023, largely powered by the “Magnificent Seven” mega-cap tech giants such as Apple, Tesla, and Nvidia. However, concerns have arisen due to these stocks largely driving the market’s performance, potentially calling into question the legitimacy of the new bull market.

Despite the skepticism, the Magnificent Seven contributed 60% of the S&P 500’s 24% total return in 2023. This included remarkable returns such as Meta’s 193% increase and Nvidia’s breathtaking 243% return. Questions surround whether Nvidia and Microsoft can continue driving the market’s AI-related resurgence.

Microsoft, with a burgeoning market cap of $2.89 trillion, surpassed Apple to become the world’s most valuable company. Its AI advances, including a $10 billion investment in OpenAI’s ChatGPT, have garnered investor attention and support.

Google launched Gemini, its latest large language model, and plans to license it on the Google Cloud platform to customers. The generative AI market is expected to grow to a $1.3 trillion market by 2032, raising questions about the potential market share that Google and Microsoft can capture.

Amazon, which saw its stock surge 81% in 2023, expects that generative AI will produce significant revenue for Amazon Web Services in the next few years. Meta’s strong momentum has been fueled by management’s cost optimization initiatives, leading to improved financial standing in the near and long term.

The market will be watching closely as the tech giants report earnings for the just-ended holiday quarter to determine if they have earned their valuations and can continue leading their respective markets in 2024. These companies are poised to further demonstrate their strength with strong cash flows and leadership.



Read more: Magnificent Seven Stock Earnings: What to Expect