Publication date: March 13, 2024
On December 19, 2024, we covered the Magnificent Seven. This is the coined collective name for the seven largest publicly traded Technology companies in the US, namely Apple, Microsoft, Alphabet (Google), Amazon, Meta (Facebook), Tesla and Nvidia.
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These companies have a huge impact on the (US) stock markets and collectively showed a fantastic performance in 2024. We indicated at the end of 2024 that the Tech sector in the U.S. could face a tough six months and can count on a correction.
Currently, it is three months later and the US Tech sector is now down 20 percent.
Considering the movement of stock indices worldwide, we can say that the Magnificent Seven is not only having a major impact on the U.S. markets but the influence has an international reach.
Time for an update because the Magnificent Seven (Mag7) has enormous potential but requires optimal timing. Moreover, after President Trump took office, there has been a lot of turmoil in the financial markets.
We recommend that you read the December 19, 2024 article first. Click here for the article.
What is the current situation regarding the Magnificent Seven?
To get a nice overview, below is the chart from the beginning of 2024. The purple line shows the movement of the Nasdaq.
You can see the huge rise in the first half of 2024 because of the AI hype. President Trump's election victory provided the next boost. As a result, both the Mag7 and the Nasdaq performed very well in that year. The Mag7 is even more volatile than the already volatile Nasdaq. Important in the chart is the movement from the beginning of 2025. This shows at a glance the current situation.
What is the expectation for the Magnificent Seven in 2025
In the December 2024 article, we expected a correction of about 15% to about $50. Meanwhile, after three months, it is clear that the policies of Mr. Trump and his companion Mr. Musk are causing more turmoil and fear in the markets. The firm America First policy may well be positive in the long term, but for the short term it gives too much uncertainty about how it will play out. Fears of sharply rising inflation and a global trade war are high.
As reported in the December 2024 article, valuations of Mag7 companies were sky high. The correction could not be avoided but is expected to go much deeper.
Below is the chart of the Mag7 as of June 2024 with the most likely scenario.
The decline of the past three months is due for a recovery. This recovery is about 10% and could lead to a price of about $51. This is followed by the consummation of the major correction and the price may fall about 20% to about $41. Then the major multi-year uptrend is completed to the price target of about $61. Proper timing can therefore produce a share price rise of 50%.
If we analyze the individual participants of the Mag7, a similar scenario always emerges, with an average decline of 12% from the current level before the upward trend can be continued. Meta, in particular, could fall considerably further (20%) while Microsoft can expect a modest 5% drop according to our algorithm.
Conclusion
The influential Magnificent Seven is in the middle of the expected difficult phase. The correction after the top year 2024 is expected to be deeper. This drop to around 41 will be preceded by a recovery. Patience is called for because the companies in the Mag7 have enormous potential and operate in a sector with a fantastic future. In the volatile Mag7, timing is very important, making vigilance and patience crucial. With a price target of $60, consider adding the ETF on the Mag7 to your portfolio at the expected price of around $41.
Disclaimer: Investing involves risk. Our analysts are not financial advisors. Always consult an advisor when making financial decisions. The information and tips provided on this website are based on our analysts' own insights and experiences. They are therefore for educational purposes only.