CNBC personality Jim Cramer is credited with coming up with the popular FANG acronym to describe mega-cap tech growth stocks Facebook, Amazon, Netflix and Google way back in 2013. Cramer expanded FANG to FAANG in 2017 when he added Apple to the mix.
While all the original FAANG stocks continue to perform well, several other high-profile stocks have emerged in recent years to lead the market to new highs. In 2023, Bank of America analyst Michael Hartnett began using the phrase “Magnificent Seven” to describe these stocks, borrowing from the 1960s Western movie of the same name. In addition to these stocks being some of the most valuable companies in the entire stock market, they are all focused largely on secular technology growth trends such as artificial intelligence, cloud computing, online gaming, and cutting-edge hardware and software.
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FAANG may no longer cut it when it comes to capturing some of the largest, most influential tech companies in the market. Instead, some use the acronym MAMA ANT to remember the newer group of securities. Here’s an overview of what every investor should know about the Magnificent Seven.
Detailed Overview of Magnificent 7 Stocks
Microsoft Corp. (ticker: MSFT)
Microsoft is the world’s largest software company and is known for its Windows operating system, Azure cloud services, LinkedIn social media platform, Office professional software suite and Xbox gaming brand. Microsoft is a market leader in professional software, and it has grabbed headlines in the past year thanks to its acquisition of Activision Blizzard and its AI innovation, which has been spearheaded by its roughly $13 billion investment in ChatGPT maker OpenAI. Through Jan. 12, Microsoft has generated a 1,218% total return for investors over the past decade. The median analyst price target for the stock is $415, suggesting 6.8% upside from its Jan. 12 closing price.
Amazon.com Inc. (AMZN)
Amazon was founded as an online bookstore back in 1994, but the company has expanded its business over the past three decades to become one of the largest online retailers, public cloud service providers and digital entertainment platforms in the world. Two of Amazon’s biggest strategic shifts have been its acquisition of brick-and-mortar retailer Whole Foods and its launch of the Amazon Prime subscription service, which includes Prime Video streaming and fast, free delivery of millions of products. Amazon has even expanded into advertising as well. Amazon shares are up 691% in the past decade, and the median analyst price target of $180.50 suggests 16.7% additional upside ahead from its Jan. 12 closing price.
Meta Platforms Inc. (META)
Meta Platforms owns and operates some of the world’s largest social media and messaging platforms, including Facebook, WhatsApp, Messenger and Instagram. As of September 2023, Meta had more than 3.1 billion total daily active people across all its platforms, and the company’s massive audience makes it one of the leading online advertising businesses in the world. Facebook shifted its focus from social media to building the metaverse in 2021, changing its corporate name to Meta Platforms. Meta shares are up 570% in the past 10 years. The median analyst price target for the stock is $390, suggesting 4.1% upside from its Jan. 12 closing price.
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Apple Inc. (AAPL)
Apple is a leading consumer electronics maker that generates about half of its revenue from iPhone sales. In addition, Apple sells Mac notebook and desktop computers, iPad tablets, Apple Watches and other wearable devices. Its services segment includes the mobile App Store, iCloud storage, advertising and other businesses. While iPhone sales growth has slowed, high-margin services sales growth has helped pick up the slack. Apple’s massive profits have also funded aggressive share buybacks, which support the stock price. Apple shares are up 1,009% in the past decade. Its median analyst price target is $200, suggesting 7.6% upside from its Jan. 12 closing price.
Alphabet is a global technology company and the parent of search engine Google, video streaming platform YouTube, autonomous vehicle company Waymo, cybersecurity company Mandiant and many other tech subsidiaries. Its top businesses include online and mobile search, online advertising, cloud services and app sales. Alphabet dominates the online search market with more than 90% share of worldwide search, according to Similarweb. Google’s Bard AI chatbot and Gemini AI model are also top competitors to ChatGPT. Alphabet has generated a 408% return in the past decade. The median analyst price target for GOOGL stock is $155.50, suggesting 9% upside from its Jan. 12 closing price.
Nvidia Corp. (NVDA)
Nvidia designs and sells high-end graphics and mobile processors used in personal computers, tablets, smartphones, workstations and other applications. While each of the Magnificent Seven has significantly outperformed the S&P 500’s return in the past decade, Nvidia’s roughly 15,013% gain is more than six times the total return of any of the other six stocks. Online gaming and cryptocurrency mining have been two growth drivers for Nvidia’s processors, but its dominance in the AI chip market is its biggest selling point in 2024. The median analyst price target for NVDA stock is $645, suggesting 17.9% upside from its Jan. 12 closing price.
Tesla Inc. (TSLA)
Tesla designs and produces electric vehicles, advanced driver assistance technology and renewable energy products. Tesla is the U.S. market leader in EV sales, and its CEO Elon Musk has built a cult-like following of investors and admirers. Tesla bulls point out the company’s disruptive potential and lack of large-scale U.S. EV competition, while Tesla bears argue the company is absurdly overvalued for an auto stock, trading at 62 times forward earnings. Tesla shares are up 2,256% in the past decade. TSLA stock’s median analyst price target is $257.60, suggesting 17.7% upside from its Jan. 12 closing price.
Final Thoughts on Magnificent 7 Stocks
Past performance is no guarantee of future returns, and several of the Magnificent Seven stocks have somewhat lofty valuations based on fundamental metrics such as forward earnings multiples and price-to-sales ratios. However, each of the seven stocks has easily outperformed the S&P 500’s 163% return in the past decade, and their exposure to high-growth technologies such as high-end software and hardware, cloud computing and artificial intelligence position them well to continue to lead their respective markets over time.
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Magnificent 7 Stocks: What They Are and How They Dominate the Market originally appeared on usnews.com
Update 01/16/24: This story was previously published at an earlier date and has been updated with new information.
