Forget FAANG and GAMMA, the 'Magnificent 7' tech stocks - including Tesla and Nvidia - now dominate the market
- Nvidia, Tesla, and five other mega-cap stocks have rallied hard in 2023, accounting for most of the S&P 500's gains.
- Some analysts have taken to calling the group "the Magnificent Seven."
A handful of Big Tech stocks have accounted for nearly all of the market's gains in 2023.
Nvidia, Tesla, and five others have all racked up huge returns, with investors emboldened by the expectation that the Federal Reserve will soon slash interest rates loading up on shares in a bid to take advantage of the artificial intelligence boom.
The stocks' massive gains have powered benchmark indices higher as well, with the S&P 500 up over 20% and the Nasdaq Composite soaring more than 30% year-to-date.
Some analysts have taken to calling the group a new name: "The Magnificent Seven".
That cluster features the GAMMA stocks – Google parent Alphabet, Apple, Meta Platforms, Microsoft, and Amazon – as well as two new names in Nvidia and Tesla.
Nvidia reached a trillion-dollar valuation for the first time ever in May thanks to an AI-fueled demand for its semiconductor chips.
Meanwhile, Tesla shares have surged since late April, with investors piling into the EV maker after it signed landmark deals for Ford and GM to use its charging network.
The so-called Magnificent 7 are now the largest seven US-listed companies in terms of market capitalization - although some strategists worry that could spell doom for the broader market.
"When there's a narrow group of leaders, there's a big risk if something bad happens to tech," Minerva Analysis founder Kathleen Brooks told Insider in May.
"If interest rates go to 7%... then that becomes bad news for the whole market," she added, referring to the fact that growth stocks tend to suffer the most when borrowing costs rise.
Nvidia has been the biggest success story from the seven Big Tech giants in 2023, surging around 230% year-to-date.
Meta and Tesla have both also racked up triple-digit gains. Apple, Microsoft, and Alphabet and Amazon have all climbed around 50%, enough to make Apple the first-ever company to achieve a $3 trillion valuation, while Amazon is up 80%.
This article was originally published on June 29, 2023.