The "Magnificent Seven" stocks saw significant gains in 2024 but may face moderation in 2025.

From Nasdaq: 2025-01-06 08:00:00

In 2024, the “Magnificent Seven” stocks, including Apple, Alphabet, and Microsoft, drove significant market gains, with the S&P 500 up 23.3% and the Roundhill Magnificent Seven ETF gaining 66.5%. These companies accounted for a large portion of S&P 500 earnings, expected to reach 23.3% in 2025.

Earnings for the “Mag 7” stocks grew by 33% in 2024, outpacing the rest of the S&P 500. However, experts predict a moderation in their dominance in 2025, with a narrower performance gap compared to other S&P 500 companies.

The Q4 2024 earnings for the “Magnificent 7” stocks are projected to increase by 20.7% year-over-year, with expectations for a 15.6% earnings growth in 2025. Companies like Tesla are set to benefit from political factors like federal deregulation.

Tech giants like Microsoft, Amazon, and Alphabet are increasing capital expenditures to boost AI capabilities in 2024 and 2025. This focus on AI software and utilities is expected to drive growth in sectors like utilities, with ETFs like XSW and XNTK positioned for gains in 2025.

Despite expectations of slowing earnings growth, the prominence of “Mag 7” stocks will remain strong due to the ongoing AI boom. NVIDIA’s Blackwell chips and Tesla’s potential benefits from federal deregulation are factors driving optimism for these stocks in 2025.

Even as the Fed hints at less dovish policies, interest rates are expected to remain lower in 2025, benefiting tech stocks that rely on borrowing for growth. The “Magnificent Seven” stocks could serve as a defensive play amid market uncertainty in 2025.

Investors can consider ETFs heavily invested in the “Mag 7” stocks, such as FNGS, MGK, XLG, and OEF, to capitalize on the potential growth of these companies in 2025. Expert recommendations point to specific stocks like Amazon, Apple, and Microsoft as potential strong performers in the coming months.



Read more at Nasdaq: Can “Magnificent Seven” ETFs Retain Their Glory in 2025?