Magnificent 7 profits now exceed almost every country in the world
The so-called “Magnificent 7” now wields greater financial might than almost every other major country in the world, according to new Deutsche Bank research. The meteoric rise in the profits and market capitalizations of the Magnificent 7 U.S. tech behemoths - Apple, Amazon, Alphabet, Meta, Microsoft, Nvidia and Tesla — outstrip those of all listed companies in almost every G20 country, the bank said in a research note Tuesday. Of the non-U.S. G20 countries, only China and Japan (and the latter, only just) have greater profits when their listed companies are combined. source : cnbc
Visually comparing the market caps, revenues, and operating incomes of the so-called "Mag 7".
Looking at these numbers, what stands out to you the most? Source: Quartr
Since February 2023:
1. Magnificent 7: +77% 2. S&P 500: +20% 3. Russel 2000: +5% 4. S&P 500 Equal Weight: +4% If you remove the Magnificent 7 from the S&P 500, the index is barely up 5% over the last year. Source: The Kobeissi Letter
The Magnificent Seven now have a higher market cap than the entire stock markets of Japan, France, the United Kingdom and Mexico COMBINED!
source : barchart
Lots of talk about a bubble in AI/Mag 7...
At this point, valuations at the top are no where near as frothy as they were at the height of the Dot Com Bubble. The 5 largest stocks traded at 43x Fwd PE in March ‘00, a 59% premium to the Mag 7’s current multiple of 27x. Source: David Marlin, Goldman Sachs
The "sexy six"... The Mag 7 (ex-TSLA) is up ~610bps more than the Mag 7 this year.
Source: Koyfin, TME
The Magnificent 7 are almost as big as… Gold!!
Source. Jeroen Blokland, True Insights
Expensive for a reason...
Since December 2019, the Magnificent 7 stocks collectively delivered a 28% annualized return. Of this, approximately 27% is attributable to earnings growth (21% sales growth and 6% margin expansion) with only 1% due to multiple expansion. In contrast, earnings drove only 13% of the S&P 500’s 17% annualized return since 2019. Looking forward, Goldman expect revenue growth will be the key driver of returns for the Magnificent 7 stocks. Bottom-up consensus expects the seven companies will collectively grow sales at a 12% CAGR through 2026 compared with an 3% CAGR for the remaining 493 companies in the S&P 500 index.
