Tech Giants Follow in Nvidia's Footsteps: Meta, Microsoft, and Others Join the Bandwagon
The Magnificent 7 Index, a collection of seven highly influential tech companies, continues to hold a significant impact on the US stock market, particularly the S&P 500. As of June 2025, these seven companies - Apple, Microsoft, Alphabet, Amazon, Meta, Nvidia, and Tesla - account for 25.5% of the total weight of the S&P 500 Index.
Nvidia and Microsoft alone represent about 7.28% and 7.12% of the index respectively, with a combined market capitalization exceeding $12.3 trillion. This impressive figure underscores their significant market dominance.
The aggregated performance of the Magnificent 7 has been mixed in 2025. While Nvidia and Microsoft have outperformed, smaller companies like Tesla have struggled. The MAGS ETF, which holds these seven stocks at equal weights, has lagged the broader market this year. However, the ETF has seen $457 million in inflows, growing assets to $2.3 billion, indicating sustained investor interest.
Comparatively, excluding the Magnificent 7 from a broad large-cap ETF has outperformed both the Magnificent 7 and the S&P 500 so far in 2025, showing a temporary advantage in avoiding these mega-cap tech names.
The tech-heavy Magnificent 7 have been under pressure in momentum-based indices. For instance, MSCI removed Apple, Meta, and Nvidia from its World Momentum Index in the latest semi-annual rebalance, shifting towards more diversified sectors like financials and industrials.
Despite the mixed performance, certain members like Alphabet and Meta have underperformed relative to the S&P 500 due to slower earnings growth prospects, whereas Amazon’s factor exposure has shifted toward a more balanced growth/core classification.
Notably, Nvidia has surpassed $4 trillion market capitalization, making it the first company to do so in stock market history. The Börsenmedien AG holds the rights to the Magnificent 7 Index and has concluded a cooperation agreement with Nvidia. Analyst Ben Reitzes of Melius Research predicts Nvidia will reach a $5 trillion market capitalization and regain $8 billion in quarterly sales in China by the fourth quarter of 2026.
Meta and Amazon have a growing AI focus in advertising and cloud within the Magnificent 7 Index. Microsoft and Nvidia dominate the AI sector in the index. The U.S. decision to lift export restrictions on H20 chips has benefited Nvidia.
It is important to note that the author may benefit from the potential price development of Nvidia, Meta, and Microsoft. The author holds direct positions in Nvidia, Meta, and Microsoft. The Börsenmedien AG receives remuneration from Nvidia. Mr. Bernd Föst, the management and majority shareholder of Börsenmedien AG, holds direct and indirect positions in the Magnificent 7 Index and Nvidia.
The Magnificent 7 Index offers investors an opportunity to participate in the development of the seven leading US tech companies. The index remains a highly concentrated group of tech giants with outsized influence on US market indices, but their performance in 2025 has been mixed, reflecting shifting market dynamics and concerns about concentration risk.
Investors interested in technology and finance may find the Magnificial 7 Index intriguing, as it provides an opportunity to invest in seven influential tech companies, including Microsoft and Nvidia, which collectively represent over 14% of the index's total weight. The artificial intelligence sector within the index, particularly Microsoft and Nvidia, is gaining significance, with Meta and Amazon also focusing on AI in advertising and cloud services. However, the aggregate performance of the index in 2025 has been mixed, with companies like Tesla struggling while others, such as Nvidia, have surpassed milestones like a $4 trillion market capitalization. The index's performance reflects the dynamic and ever-changing market landscape, highlighting the need for careful investing and consideration of concentration risk.
