What To Expect from the Magnificent Seven in 2025 | Global News Avenue

The S&P 500 is having another stellar year in 2024, rising more than 20% for the second consecutive year, a feat it last accomplished in the 1990s. As in the previous year, a small group of stocks accounted for a large share of the gains.

A large technology company from the Big Seven group – Apple (AAPL), NVIDIA (NVDA),Microsoft(Microsoft Corporation), Amazon (Amazon), alphabet (Google)(Google), Yuan (Mehta) and Tesla (Tesla) — up 63% in 2024 and more than 75% the year before. There are bumps in the road – this group has its own Worst day on record But for the most part, the boom in artificial intelligence (AI) continues to lift the stocks of these tech giants.

So, after two years of market dominance, what’s next? Hao Qi?

Will the Mag 7 get any less gorgeous?

Cumulatively, the Big Seven make more profits in a single year than the entire stock market in most countries. Even in the United States, their profits are much higher than other companies.

Without the seven major indexes, S&P 500 earnings per share would contract in 2023 instead of growing. The group’s profits continue to lead the index in 2024, accounting for about 75% of S&P 500 earnings growth.

However, by 2025, as growth slows in the seven largest economies, growth is expected to expand in the rest of the index. By 2025, the Big Seven’s share of S&P 500 earnings growth is expected to shrink to just 33%. This is partly because the group has performed strongly this year, making it more difficult to achieve significant year-on-year growth.

As for their stocks, Mag Seven expects to continue outperforming the market through 2025, albeit by less than the past two years.

Analysts at Goldman Sachs predict that the group will collectively outperform “the other 493 indexes” (the S&P 500, excluding the seven major indexes) by 7 percentage points this year, the smallest margin in seven years.

What’s next for Nvidia?

Nvidia has been the undisputed leader among the Mag Seven since it was first named in 2023. The company’s shares are up 171% in 2024 as its sales and earnings soar as demand for artificial intelligence accelerators booms.

Nvidia remains the top choice among Wall Street analysts. None of the analysts tracked by FactSet Research recommend underweighting or selling the stock.

Despite a rough patch and year-end correction, analysts at Bernstein, Morgan Stanley and Bank of America have recently Rate it top choice 2025. They all expressed confidence that strong demand for Nvidia’s next-generation Blackwell chips will drive another year of extraordinary growth, despite some hiccups in development.

What’s next for Tesla?

Tesla investors could be in for a watershed moment for the electric car maker.

Chief Executive Elon Musk has become a senior adviser to President-elect Donald Trump, with whom he will co-lead an advisory group focused on cutting government spending. Tesla’s stock price rose 63% last year entirely because of Musk’s relationship with Trump – the stock rose just 1% on Election Day – and his role in the government will likely continue to affect the stock price.

Musk is known for making big promises, and his announcement about 2025 is no exception. At the beginning of 2024, he promised A more affordable model will be launched in 2025. He expects Tesla to roll out full self-driving software in Texas and California, and he even floated the idea Pitch Optimus Primethe company’s humanoid robot, will be launched within the year.

As for Tesla’s core business – making and selling electric vehicles – the future is unclear. Trump is expected to end federal tax credits for electric vehicles, which could make Teslas unaffordable for more consumers. Interest rates are also likely to remain high, creating more headwinds for affordability.

Will AI spending turn into AI revenue?

Throughout 2024, Wall Street has questioned the wisdom of Big Tech’s AI infrastructure spending. Cloud providers such as Microsoft, Amazon and Alphabet spent tens of billions of dollars building data centers last year, but they sometimes struggled to convince investors that all their investments would pay off.

As the artificial intelligence boom enters its third year, analysts expect investors to shift focus from building AI capabilities to deploying and monetizing AI products. Goldman Sachs analysts call this pivot toward AI monetization the “third phase” of AI development. They believe that software and service providers are among the companies most likely to achieve growth during this stage.

JPMorgan analysts also noted that all the spending this year by Big Tech may start to bite it in the form of higher depreciation costs.