The Magnificent Seven, the US titans of technology, have ruled supreme in stock markets for the past two years, delivering stellar returns. Their formerly nerdy bosses are now billionaires with supersized political clout as buddies of President Trump.
The fortunes of the US stock market have been dictated by the seven: Alphabet, owner of Google, Amazon, Apple, Meta – whose empire encompasses Instagram, Facebook and WhatsApp – Microsoft, the semiconductor colossus Nvidia and Tesla.
There is some dispute about who coined the term Magnificent Seven, based on the western film of the 1960s. Credit has been claimed by Bank of America and Goldman Sachs among others.
But there is a much larger dispute as to whether you should continue to back these businesses, either directly or through your Isa and pension funds.
Here’s what you need to know now.
The Magnificent Seven, the US titans of technology, (left to right) Amazon’s Jeff Bezos, Tesla’s Elon Musk, Microsoft’s Satya Nadella, Meta’s Mark Zuckerberg, Apple’s Tim Cook, Nvidia’s Jensen Huang and Alphabet’s Sundar Pichai
Alphabet
EXPERT VERDICT: BUY
Alphabet, then known as Google, was set up in 1998 by PhD students Sergey Brin and Larry Page.
Today the $2.5 trillion corporation is a digital advertising juggernaut.
Alphabet has diversified into cloud computing and branched out into Artificial Intelligence (AI) with the launch of its Gemini system.
It recently unveiled Willow, a new chip for quantum computing.
Boss Sundar Pichai, a strict vegetarian and fitness fanatic, took the top job in 2019. He is worth $1.3 billion and enjoys an annual salary of $8.8 million.
But, despite such moves and Pichai’s management flair, Alphabet shares fell this week after disappointing fourth quarter results and the announcement that the group would be investing $75 billion in AI – more than expected.
This commitment underlines the level of competition in the AI supremacy game. Nevertheless analysts remain sanguine about Alphabet’s ability to stay ahead, rating the shares a ‘buy’.
Amazon
EXPERT VERDICT: BUY
Amazon may be known for its next-day delivery service, but the most profitable part of the corporation is AWS – Amazon Web Services – the world’s biggest provider of cloud computing services
In 1994, Princeton graduate Jeff Bezos set up Amazon – in a garage – as a bookseller. It is now the largest online retailer with a market capitalisation of $2.5 trillion.
The most profitable part of the corporation is, however, AWS – Amazon Web Services – the world’s biggest provider of cloud computing services. It has a 30 per cent-plus share of this fast-expanding sector in which companies outsource storage of data.
Amazon’s investment in the AI Anthropic start-up was an attempt to catch up with Microsoft’s acquisition of OpenAI, creator of the popular ChatGPT system.
Bezos stood down as chief executive in July 2021 and was replaced by former AWS boss Andy Jassy, but is now chairman, with a 9 per cent stake in the firm.
The Amazon founder has also enriched shareholders. Anyone who invested £1,000 when the company went public in 1997 would now be sitting on £2,663,000.
The shares are $229 and experts think they have further to rise, despite indications of a slowdown in this week’s results. Just this week brokers at Swiss bank UBS raised their target price to $275.
Apple
EXPERT VERDICT: BUY
Anyone who invested £1,000 in Apple shares in 1980 when it was listed on the stock market would now have £2.5 million
Apple was founded in 1976 by Steve Jobs and Steve Wozniak in the Los Angeles suburb of Los Altos in, you guessed it, a garage. There followed an extraordinary period of technical and design innovation. The company, which some regard as more of a luxury goods group than a technology star, is worth $3.6 trillion. Its ambitions now hinge on AI.
Results for the final quarter of 2024 revealed that sales continue to be weak in China. Nevertheless, global revenues for the three months were $124.3 billion, which was higher than forecast.
Anyone who invested £1,000 in Apple shares in 1980 when it was listed on the stock market would now have £2.5 million. Over the past 12 months the shares have risen 20 per cent to $228 and most analysts rate them a ‘buy’.
Some of this optimism about the outlook is based on admiration for Tim Cook, Apple’s chief executive. He earned $75 million last year and rises every day at 5am to exercise – during which time he never looks at his iPhone.
Meta
EXPERT VERDICT: BUY
Optimism over Meta’s ability to reap the benefits of AI has pushed the share price 52 per cent higher over the past 12 months to $715
When 19-year old Harvard student Mark Zuckerberg set up the Facebook social network in 2004 he probably did not imagine it would become a $1.7 trillion corporation. Nor could he have imagined that, by 2025, his wealth would amount to $212 billion.
The company, which changed its name to Meta in 2021, also owns Instagram and WhatsApp.
In 2025, the emphasis is on AI – on which Zuckerberg is spending billions of dollars.
Aarin Chiekrie, an equities analyst at investment platform Hargreaves Lansdown, argues that Meta is ‘well placed to drive AI-related growth and continue its dominance in the ad and social networking world’.
Optimism over Meta’s ability to reap the benefits of AI has pushed the share price 52 per cent higher over the past 12 months to $715 – and almost 1,770 per cent since the company’s flotation in 2011.
Despite the turmoil caused by the suggestion that Chinese firm DeepSeek had produced comparable AI models for far less than its US rivals, analysts affirmed their view that the shares are a ‘buy’ with an average target price of $727.
Microsoft
EXPERT VERDICT: BUY
Microsoft is now run by Satya Nadella, a computer engineering graduate and Trump fan who attributes his ambition to the gym and telling himself to be grateful
Microsoft was founded in 1975 by Harvard drop-out Bill Gates and a couple of friends – in a garage, where else?
Today the company is worth more than $3 trillion.
As well as the Windows operating system and the Microsoft Office suite made up of Excel, PowerPoint and Word, its fiefdom encompasses the Azure cloud computing business, LinkedIn – and a large slice of OpenAI.
OpenAI developed ChatGPT, the best-known and most expensive brand in generative AI, and thus considered to be the most imperilled by the Chinese DeepSeek.
But both may be winners since a surge in demand for products of all types is now expected.
Microsoft is now run by Satya Nadella, a computer engineering graduate and Trump fan who attributes his ambition to the gym and telling himself to be grateful. Microsoft’s shares have underperformed those of its peers recently but analysts are keeping the faith.
The current share price is $410. The average target price is $507 and one analyst is betting on $650.
Nvidia
EXPERT VERDICT: BUY
In 30 years, Nvidia has changed from an obscure 3D graphics firm for video games into a $2.9 trillion behemoth with a controlling position in the upscale microchips that power generative AI.
The founder and chief executive Jensen Huang is betting that most of the Magnificent Seven will continue to spend lavishly with his firm. However, his company’s valuation has fallen amid the panic over the DeepSeek interloper.
Nvidia’s shares have fallen by 6 per cent this year to $130, although they are still 250 times higher than a decade ago. Analysts are backing Huang with an average target price of $174.
Tesla
EXPERT VERDICT: HOLD
Tesla’s sales, profits and margins for the fourth quarter of 2024 were all lower than expected
Tesla is a car maker but it is in the Magnificent Seven thanks to the software behind its self-driving vehicles. It has been led by Elon Musk, its chief executive, since 2008 and now the world’s richest man, worth $434 billion.
He is also President Trump’s ‘first buddy’ and co-head of Doge– the new US Department of Government Efficiency.
So great is his influence, amplified by his ownership of the X (formerly Twitter) platform, that some investors appear prepared to overlook the most recent setbacks at Tesla.
The company’s sales, profits and margins for the fourth quarter of 2024 were all lower than expected. Musk’s political pronouncements are proving a turn-off in key European markets such as Germany.
Tesla may also be harmed by the removal of Biden-era policies that promoted electric vehicles.
Even so, shares have soared 89 per cent in the past six months, fuelled by Musk’s hopes for humanoid robots, robotaxis and AI to optimise the performance of self-driving vehicles of all kinds.
This disconnect between the figures caused one analyst to remark that Tesla’s shares have become ‘divorced from the fundamentals’, which may be why the shares are rated a ‘hold’ rather than a ‘buy’.
Investors cannot feel too hard done by. Since 2014, the share price has gone up 24 times to $374. Critics, however, worry that the wheels are coming off.
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