David Gura:
Indeed, Geoff, the past year marked a significant turning point.
You brought up the Magnificent Seven, a term coined by Michael Hartnett, an investment strategist at Bank of America. Hartnett, a fan of the 1960 Western film featuring Yul Brynner and Eli Wallach, drew inspiration from it for this group’s name.
The seven prominent stocks in this group are Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla. Primarily tech-focused, most of these companies are deeply involved in or exploring artificial intelligence (A.I.), with Tesla being somewhat of an outlier in this regard. Notably, Nvidia stands out for its role in designing the microchips powering the supercomputers essential for A.I. applications.
These stocks significantly outperformed the market last year, with the S&P 500 seeing a 24 percent increase while the Magnificent Seven surged by over 100 percent. Several factors contribute to their success, including their A.I. involvement, their integral presence in daily life, ensuring resilience in economic downturns, and substantial cash reserves. In the current climate of rising interest rates, these companies stand out as they do not rely on borrowing for expansion due to their robust financial positions.
