A group of stocks called the “Magnificent Seven” have been performing exceptionally well, making up nearly 28% of the SPDR S&P 500 ETF Trust (SPY), which tracks the U.S. benchmark index.
The S&P 500 (SPX) has returned 18.7% this year with dividends reinvested. Here is how the Magnificent Seven stocks have performed and how their forward price-to-earnings ratios have changed:
| Company | 2023 return | 2022 return | Return since the end of 2021 | Forward P/E | Forward P/E at end of 2022 | Forward P/E at end of 2021 |
| Apple Inc. (AAPL) | 36% | -26% | 0% | 28.3 | 20.5 | 30.2 |
| Microsoft Corp. (MSFT) | 42% | -28% | 2% | 29.2 | 23.1 | 34.0 |
| Amazon.com Inc. (AMZN) | 72% | -50% | -13% | 48.9 | 46.7 | 64.9 |
| Nvidia Corp. (NVDA) | 212% | -50% | 55% | 34.8 | 34.4 | 58.0 |
| Alphabet Inc. Class A (GOOGL) | 57% | -39% | -5% | 21.3 | 16.9 | 25.4 |
| Alphabet Inc. Class C (GOOG) | 57% | -39% | -4% | 21.4 | 17.0 | 25.3 |
| Tesla, Inc. (TSLA) | 124% | -65% | -22% | 59.2 | 22.3 | 120.3 |
| Meta Platforms Inc. Class A (META) | 159% | -64% | -7% | 18.9 | 14.7 | 23.5 |
| S&P 500 | 19% | -18% | -3% | 18.7 | 16.8 | 21.5 |
| Source: FactSet | ||||||
The forward P/E ratios are based on rolling 12-month earnings-per-share estimates among analysts polled by FactSet.
The Magnificent Seven stocks have shown significant gains this year, even though Apple Inc., Microsoft Corp., and Nvidia Corp. are down since the end of 2021. The forward P/E ratios have increased for all seven stocks this year, as well as for the S&P 500, but they are all lower than at the end of 2021.
However, investors seeking gains in technology stocks may need to look beyond their index funds and the giant tech companies. Michael Brush explains why the Magnificent Seven now appears to be a “crowded trade” and suggests exploring three other technology stocks.
ARM IPO
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Developments in EV Land
Claudia Assis explains how Tesla can benefit from the strike against the Big Three U.S. auto manufacturers. Joy Wiltermuth reports on Tesla’s plan to securitize $1.8 billion in vehicle leases. Additionally, shares of Nikola Corp. have risen as the company expects to start delivering hydrogen-powered trucks this month.
A Big Week for Powell
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Parting Ways with Your Investment Adviser
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Bipartisan Agreement on Bank Regulations
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Life Expectancy and Financial Planning
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That’s it for this week. Stay informed with MarketWatch!
