From NASDAQ:

The “Magnificent Seven” stocks, including Microsoft, Apple, and Tesla, outperformed the Nasdaq Composite and S&P 500 in 2023. However, in 2024, Alphabet, Apple, and Tesla are underperforming, with Tesla down over 30% year to date. This shift highlights the importance of understanding market trends and potential risks.

The success of Magnificent Seven stocks is driven by their focus on leveraging artificial intelligence (AI) for earnings growth. Companies like Alphabet, Meta Platforms, and Microsoft, which focus on B2B sales and software, show strong performance. In contrast, Apple and Tesla’s reliance on selling physical products to consumers makes monetizing AI more challenging.

Tesla faces challenges beyond the AI trend, such as increased competition in the EV market and price pressure. Despite being part of the Magnificent Seven, Tesla’s growth story is under scrutiny, leading to a sell-off. Investors should carefully evaluate Tesla’s long-term prospects and its ability to maintain a competitive edge in the evolving energy and EV industries.

While the Magnificent Seven label reflects market trends, investors should focus on the long-term fundamentals of companies. Groupings like FANG or FAANG have evolved over time, and individual stock performance varies. Understanding market sentiment and separating it from long-term investment theses is essential for making informed decisions. It’s important to remember that these groupings are merely a representation of what is hot in the market at a given time and should not be taken as a definitive investment strategy.



Read more at NASDAQ: If the “Magnificent Seven” Is So Great, Then Why Is Tesla the Worst-Performing S&P 500 Stock in 2024?