The (Not So) Magnificent 7

The Magnificent 7 companies: Alphabet, Apple, Amazon, Meta, Microsoft, Nvidia, and Tesla have been a dominant force in U.S. equity markets over the past few years, helping propel the performance of the S&P 500. Last year, these seven companies accounted for 48% of the benchmark's 23% price return. 

But their start to 2025 has been less inspiring, with same companies as a group returning -6% YTD (Jan, Feb). The S&P 500 as a whole is still up a modest 1.2% YTD. However, back in 2022, when the Mag 7 fell 40%, it pulled the S&P 500 down 19%. Without the Mag 7, the S&P 500 would have returned -8%. Maybe the pendulum swings back the same way in 2025. Given that these companies are collectively now a bigger weight of the S&P 500 at 30.6% than in 2022 (24.1%), the impact of a Mag 7 decline would be even more.