By Lewis Krauskopf
NEW YORK (Reuters) -The U.S. technology and growth stocks known as the “Magnificent Seven” have regained their footing somewhat after a steep slide, but a few weeks of growing valuations and a dimming earnings edge could make it harder for them to push Wall Street higher.
The stocks — Apple (AAPL), Microsoft (MSFT), Nvidia (NVDA), Alphabet (GOOG, GOOGL), Amazon (AMZN), Meta Platforms (META) and Tesla (TSLA) — have stumbled in 2025, dragging down the benchmark indexes they had lifted to record peaks the prior two years.
The highly valued shares had swooned as investor fears spiked about the economic fallout from President Donald Trump’s tariffs. Gold actually replaced long “Magnificent 7” as the most crowded trade among fund managers in a BofA survey earlier this month, ceding that title in the monthly survey for the first time in two years.
The group has rebounded since Trump paused many of his heftiest tariffs on April 9. The seven stocks kept rallying along with the broader market in recent days amid some encouraging signs the trade war was easing. Earnings this week will test the strength of the bounce, with four of the group due to report: Microsoft and Facebook parent Meta on Wednesday, Apple and Amazon on Thursday.
“We’re back to pricing in what might be better than worst-case scenarios where some trade deals get announced,” said Art Hogan, chief market strategist at B Riley Wealth. “When you make that shift from de-risking your books to getting back in a risk-on attitude, that is going to show up first in all things technology and specifically the Mag Seven for sure.”
The group’s 2025 struggles are a dramatic shift from the prior two years. The Magnificent Seven’s stunning gains meant they were responsible for well over half of the S&P 500’s 58% two-year return in 2023 and 2024.
Broadly speaking, the rest of S&P 500 (^GSPC) has held up better this year than the seven megacaps. The Roundhill Magnificent Seven ETF — which weighs the stocks evenly — is down over 14% so far this year while the Defiance Large Cap ex-MAG 7 ETF, which provides exposure to the index excluding the group, is down roughly 1%.
Even after their declines, the stocks’ massive market values mean they still hold significant sway over key indexes. For example, the seven stocks account for about 30% of the S&P 500’s weight, down from about 34% at the start of the year, according to LSEG Datastream.
While other U.S. sectors can pick up some of the slack, “you can’t just brush this off and say, without these stocks, don’t worry,” said Jay Woods, chief global strategist at Freedom Capital Markets. “The real leadership is in megacap growth, and if these leaders aren’t growing … it’s not going to help us take a big leg higher.”
