What's next for the Magnificent 7 stocks?

What are the Magnificent 7 stocks?

The Magnificent 7 refers to a group of highly influential large cap technology companies that have become some of the most dominant forces in global markets.

This curated group consists of Alphabet (the parent company of Google), Amazon, Apple, Meta (owner of Facebook, WhatsApp and Instagram), Microsoft, Nvidia and Tesla.

The term was coined by Goldman Sachs analyst David Costin back in 2017, and these companies have since established themselves as leaders in their respective industries — whether consumer electronics, cloud computing, social media, artificial intelligence (AI) or electric vehicles (EVs).

All have consistently reported strong profit and revenue growth, and all are valued in the trillions of US dollars.

Due to their massive market capitalisations, these seven companies represent a significant portion of the revenue growth and weighting of major indices including the NASDAQ 100 and the S&P 500.

In fact, these seven shares are worth roughly a third of the S&P 500 index.

Magnificent 7 stocks selection criteria

While the MAG7 stock  names are set in stone, the criteria for selecting them initially incorporated in-depth analysis of their financial metrics — such as robust balance sheets and consistency of earnings growth — as well as qualitative factors including unique competitive advantages and market position.

These criteria are assessed to identify stocks with significant growth potential that are likely to perform consistently.

Here's a closer look at some of the main aspects that were considered in the selection process:

• Financial strength — analysis of revenue growth, profitability and cash flow stability to gauge a company's financial health and operational efficiency
• Sustainability of business model — examination of the long-term sustainability of the company's business model, including its adaptability to shifting market trends
• Competitive advantage and market position — evaluation of how the company differentiates itself from similar businesses as well as how it's perceived by consumers
• Corporate governance and management quality — review of the robustness of the company's governance practices and efficiency of the company's management
• Macroeconomic factors and global market dynamics — analysis of broader economic conditions, including global market trends, that could influence company performance

Current market context 

The Magnificent 7 tech titans have led market gains in both 2024 and 2025, with the S&P 500 rising by sharply over the past two years. 

However, some analysts are now concerned that the Magnificent 7 may be in a bubble. The S&P 500 currently sports a price-to-earnings ratio significantly above the 25x recorded before the dot-com crash, raising questions about whether current valuations can be sustained.

With stocks riding high amid promises to cut taxes and loosen regulation under the Trump administration, billionaire tech CEOs have largely attempted to curry favour with the US President, with many attending Trump's inauguration.

However, given the consistent earnings beats throughout 2024 and 2025, investors have come to expect significant jumps in revenue every quarter, which is arguably not possible in the long run.

Many analysts consider that the Magnificent 7 exists within a larger tech bubble, while others think the new technology — particularly artificial intelligence — is so transformative that the premium valuations can be justified.

How to invest in the Magnificent 7 with us

1. Learn more about Magnificent 7 stocks
2. Download the IG Invest app or open a share dealing account online
3. Search for Magnificent 7 stocks on our app or web platform
4. Choose how many shares you’d like to buy
5. Place your deal and monitor your investment

Investors look to grow their capital through share price returns and dividends - if paid.

But the value of investments can fall as well as rise, past performance is no indicator of future returns, and you could get back less than your original investment.

We also offer many ETFs dominated by the Magnificent 7, including iShares Core S&P 500 UCITS ETF or the iShares NASDAQ 100 UCITS ETF ETF. These larger funds tend to sport low expense fees and are popular with passive investors seeking to gain exposure to the tech and artificial intelligence trends.

Magnificent 7 stocks to watch

Monitoring these influential stocks can be potentially beneficial in today's fast-evolving market. The Magnificent 7 stocks may offer unique opportunities, though they also face significant headwinds.

These stocks have been listed by market capitalisation:

Nvidia

Nvidia (NASDAQ: NVDA) designs graphics processing units (GPUs) that have become the essential hardware for artificial intelligence and machine learning. While the company originally built its reputation in gaming graphics, its chips now power data centREs training and running AI models for companies worldwide.

Nvidia's GPUs have become the standard for AI workloads, with the company commanding over 90% market share in AI chips. The company also provides the software ecosystem (CUDA) that developers use to program these chips.

Nvidia's moat is its CUDA software platform and developer ecosystem, combined with a significant technological lead. CUDA has become the industry standard for GPU programming, with millions of developers trained on it and countless applications built for it.

This creates massive switching costs, because while competitors might build comparable hardware, they lack the decade-plus software ecosystem that Nvidia has cultivated. The company's chips are also simply faster and more efficient for AI workloads than alternatives, and its rapid innovation cycle (new chip architectures annually) makes it difficult for competitors like AMD or Intel to catch up.

Apple

Apple (NASDAQ:AAPL) designs and manufactures consumer electronics, with the iPhone representing roughly half its revenue. The company has built an integrated ecosystem of hardware, software and services that work seamlessly together—iPhone, iPad, Mac, Apple Watch, AirPods, and services like iCloud, Apple Music and the App Store.

This ecosystem creates powerful switching costs, as users become deeply embedded in Apple's world with their data, purchases and connected devices all working together.

Apple's competitive moat stems from its brand loyalty and ecosystem lock-in, arguably the strongest in consumer technology.

Once customers buy into multiple Apple products, the friction of switching to competitors becomes enormous. The company also benefits from its control of both hardware and software (iOS), allowing it to optimise performance and capture App Store fees. Its massive scale allows for premium pricing power and strong supplier relationships that competitors struggle to match.

Microsoft

Microsoft (NASDAQ: MSFT) is a diversified technology giant spanning cloud computing (Azure), productivity software (Office/Microsoft 365), operating systems (Windows), gaming (Xbox) and business applications (LinkedIn).

Azure is the second-largest cloud platform globally, while Office remains the dominant productivity suite for businesses worldwide. The company has successfully transitioned most of its software to subscription models, creating predictable recurring revenue streams.

Microsoft's moat is built on deep enterprise entrenchment and switching costs. Businesses have decades of infrastructure, training, and workflows built around Windows and Office, making migration to alternatives extremely costly and disruptive.

Azure benefits from this relationship, as enterprises prefer to consolidate cloud services with a trusted vendor already embedded in their IT infrastructure. 

Alphabet

Alphabet (NASDAQ: GOOG) is primarily an advertising company, with Google Search, YouTube and the Google Display Network generating the lion's share of its revenue.

Google Search commands over 90% global market share, while YouTube is the world's second-largest search engine and the world's dominant video platform. The company also owns Android (the world's most popular mobile OS), the Chrome browser, Google Maps, Gmail and is a major player in cloud computing through Google Cloud Platform.

Google's moat is its unparalleled data advantage and network effects in search. Every query improves its algorithms, creating a self-reinforcing cycle where better results attract more users, generating more data, leading to even better results. This makes it nearly impossible for competitors to compete for market share.

YouTube benefits from similar network effects. Creators go where the audience is, and audiences go where the content is. Google's scale in digital advertising, combined with its targeting capabilities from data across its properties, gives it exceptional pricing power and efficiency.

Amazon

Amazon (NASDAQ: AMZN) operates the world's largest e-commerce marketplace, accounting for almost half of US online retail.

The company also runs Amazon Web Services (AWS), the world's leading cloud computing platform that generates the majority of Amazon's operating profit. Beyond these core businesses, Amazon operates a fast-growing advertising business, produces content through Prime Video, manufactures consumer devices (including Echo and Kindle), and owns Whole Foods.

Amazon's competitive moat comes from its logistics infrastructure and Prime membership flywheel. The company has invested hundreds of billions of dollars in warehouses, delivery networks, and fulfillment technology that would take competitors decades to replicate.

Prime membership creates a powerful retention mechanism, as members spend more and shop more frequently to justify their subscription, which funds even faster delivery and more benefits, attracting more members.

Likewise, AWS benefits from massive scale advantages and switching costs, as migrating cloud infrastructure is complex and risky for enterprises.

Meta Platforms

Meta Platforms (META) operates the world's largest social networks including Facebook, Instagram and WhatsApp . The company generates nearly all its revenue from advertising across these platforms, using detailed user data to enable highly targeted ads.

Meta has invested heavily in virtual and augmented reality through its Reality Labs division (Quest VR headsets, metaverse initiatives), though this remains unprofitable and represents a small fraction of revenue.

Meta's moat is pure network effects at unprecedented scale. Facebook and Instagram are valuable because everyone else is there; users stay because their friends, family, and communities are on the platforms, and advertisers pay premium rates to reach these massive, engaged audiences.

WhatsApp dominates messaging in most of the world outside the US and China. The chicken-and-egg problem of building a competing social network is nearly insurmountable because new users won't join without existing users, but you can't get existing users without new users.

Meta's treasure trove of user data also enables advertising targeting that competitors struggle to match, even as privacy regulations tighten.

Tesla

Tesla (TSLA) is the electric vehicles trailblazer and is the world's most valuable automaker despite producing a fraction of the volume of traditional car companies. The company's lineup includes the Model 3, Model Y (the world's best-selling EV), Model S, Model X and the Cybertruck.

Beyond cars, Tesla produces energy storage systems (Powerwall, Megapack) and solar panels, though vehicles represent the vast majority of revenue. The company operates its own charging network (Supercharger) and manufactures many components in-house, including batteries.

Tesla's competitive advantages are debated more than any other Mag 7 company. Bulls point to its lead in EV technology, battery costs, and manufacturing efficiency, plus its over-the-air software updates and data from millions of vehicles training its self-driving systems. And the Supercharger network provides a superior ownership experience compared to competitors.

However, skeptics question whether these advantages constitute a durable moat as traditional automakers scale EV production and technology gaps narrow. 

Magnificent 7 ETFs to watch

The Roundhill Magnificent Seven ETF provides pure-play exposure to an equally weighted portfolio of the Magnificent 7 stocks in a single position.

You can also use exchange-traded funds (ETFs) with a significant portion of their holdings in the Magnificent 7 to get exposure to these tech giants.

Common choices as of November 2025 include:

1. Vanguard World Fund - Vanguard Mega Cap Growth ETF — tracks the CRSP US Mega Cap Growth Index, which holds 88 securities in its basket, with the Magnificent 7 collectively accounting for more than half of total assets.
2. iShares S&P 100 ETF — iShares S&P 100 ETF offers exposure to 100 of the largest US companies. The Magnificent 7 accounts for a combined circa 40% share.
3. iShares Core S&P 500 UCITS ETFiShares Core S&P 500 UCITS ETF — this larger fund enjoys low expense fees and is popular with passive investors seeking to gain exposure to the tech and artificial intelligence trends.

Risks of investing in the Magnificent 7 stocks

Investing in stocks that belong to the Magnificent 7 grouping comes with several risks, including:

• Concentration risk — having significant exposure to just seven companies, particularly within the same sector, can lead to portfolio vulnerability if these stocks underperform
• Valuation concerns —current P/E ratios are significantly elevated compared to historical averages, raising questions about whether valuations can be sustained. Some analysts draw parallels to the dot-com bubble of 1999
• AI disruption — the DeepSeek saga demonstrates how quickly the AI landscape can shift, potentially undermining the competitive advantages of established players like Nvidia and threatening billions in capital expenditure
• Regulatory risks — companies like Alphabet face significant regulatory challenges, including antitrust concerns and potential forced divestitures
• Sensitivity to macroeconomics — interest rate changes, inflation and economic downturns can disproportionately affect high-growth technology stocks
• Earnings expectations — given consistent beats throughout 2024 and 2025, investor expectations are elevated. Missing these expectations could trigger significant sell-offs

What is the difference between the Magnificent 7 and FAANG stocks?

The Magnificent 7 and FAANG stocks are both groupings of prominent, high-performing technology companies, but the latter is considered to have been replaced by the former.

This could be due to the Magnificent 7 generally being regarded as an updated reflection of the tech industry's current leaders and their impact on the stock market. However, both groupings may change over time as market conditions and company performances evolve.

These companies are also included in other groupings of prominent, influential and high-performing technology stocks such as GAFAM. GAFAM stands for Google (now Alphabet), Apple, Facebook (now Meta), Amazon and Microsoft.

Magnificent 7 summed up

• The Magnificent 7 refers to a group of highly influential large-cap technology companies listed in the United States
• The term was coined by Goldman Sachs analyst David Costin back in 2017, using it to refer to Apple, Microsoft, Alphabet, Amazon, Meta Platforms, Nvidia and Tesla
• These companies are all leaders in their respective industries — whether consumer electronics, cloud computing, social media, AI or EVs.
• They represent a significant portion of the revenue growth and weighting of major indices including the NASDAQ 100 and the S&P 500.