Are the Magnificent Seven still magnificent?
In 2025, so far, the seven most influential U.S. tech giants – The Magnificent Seven, or Mag 7 (Alphabet, Amazon, Apple, Microsoft, Meta Platforms, Tesla and Nvidia) – have continued to assert their dominance and reinforce their role in determining the S&P 500’s trajectory. Despite what appears to be artificial intelligence (AI) hype, or perhaps because of it, the seven giants have collectively outpaced the broader S&P 500’s 12.47 per cent year-to-date (YTD) rise, delivering a gain of 15.9 per cent through Monday’s close. At the same time, however, their market-capitalisation share has dropped slightly from a peak of 32.2 per cent in mid-August to 31.3 per cent of the S&P 500’s total value. That indicates some stocks outside of the Mag 7 have been outperforming them.
The remarkable rebound
The year began with turbulence for the Magnificent Seven. After reaching a collective market cap of US$18.4 trillion on December 24, 2024, the group succumbed to Trump’s liberation Day tariff announcement, enduring a steep 28.6 per cent decline. High valuations and a slowdown in consensus revenue and earnings growth forecasts didn’t help. However, they’ve since staged a swift recovery, reclaiming lost ground and soaring to a new record high of US$19.6 trillion. Their 32.4 per cent surge has significantly outpaced the S&P 500’s 18.2 per cent gain.
Revenue and earnings: a steady climb to new peaks
The Magnificent Seven’s financial metrics however will ultimately determine the persistence of their popularity. In 2024, according to Yardeni Research, their collective forward revenues surged by 15.8 per cent, but growth has moderated in 2025, rising 9.8 per cent YTD to a record US$2.5 trillion. Similarly, forward earnings, which soared 35.6 per cent last year, have grown at a more modest 15.6 per cent YTD. Despite this slowdown, the group’s forward profit margin has continued its upward trajectory, climbing from 21.6 per cent at the start of 2024 to 26.8 per cent in mid-September 2025 – a new all-time high.
Revenue growth outpacing the market
While the Magnificent Seven’s revenue growth has slowed from its 2024 peak, it still exceeds the broader market. Their latest estimated forward revenue growth rate of 13.2 per cent has rebounded from an 18-month low of 11.8 per cent in May 2025. This figure more than doubles the S&P 500’s latest estimated aggregate revenue growth of 6.1 per cent, a trend of outperforming the S&P 500 that has been in place since 2013. It’s this relative growth rate outperformance that has driven their popularity.
A more tempered outlook
Analysts believe the Magnificent Seven’s earnings will grow by 17.5 per cent over the next 12 months, a notable decline from prior years and approaching a two-year low. This growth rate, while still respectable, is only 4.8 percentage points above the S&P 500’s forecasted 12.7 per cent earnings growth. The tempered outlook reflects cautious optimism amid acknowledgement of the law of large numbers. And they do have a habit of beating expectations.
Conclusion: a cornerstone of market leadership
The Magnificent Seven’s market capitalisation, revenue, and profit margins have reached unprecedented highs, but growth rates have moderated. Perhaps their futures now depend less on beating last year’s numbers and more on beating the rest of the S&P 500’s. These tech giants will continue to innovate and expand, ensuring their influence on the U.S. economy and global markets remains.
Disclaimer:
The Polen Capital Global Growth Fund own shares in Nvidia, Alphabet, Microsoft and Amazon. This article was prepared 22 September with the information we have today, and our view may change. It does not constitute formal advice or professional investment advice. If you wish to trade these companies you should seek financial advice.
Roger Montgomery is the Founder and Chairman of Montgomery Investment Management. Roger has over three decades of experience in funds management and related activities, including equities analysis, equity and derivatives strategy, trading and stockbroking. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.
He is also author of best-selling investment guide-book for the stock market, Value.able – how to value the best stocks and buy them for less than they are worth.
Roger appears regularly on television and radio, and in the press, including ABC radio and TV, The Australian and Ausbiz. View upcoming media appearances.
This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.
