The Magnificent 7 — Apple, Microsoft, Alphabet (Google), Amazon, Nvidia, Meta (Facebook), and Tesla — have significantly outperformed the broader stock market over the past few years, especially since 2023. Here’s a comparison and some context:

1. Performance vs. S&P 500

These 7 stocks contributed the majority of the S&P 500’s gains in 2023 and early 2024.

While the S&P 500 might have risen by around 20% in 2023, without the Magnificent 7, the rest of the index would have returned much less — estimates suggest low single digits or even flat performance.

2. Valuation

The group trades at much higher price-to-earnings (P/E) ratios than the average S&P 500 company, reflecting their strong growth potential.

Nvidia, for instance, has surged on AI demand and trades at a lofty multiple, while Tesla's valuation has fluctuated due to demand concerns and competition.

3. Concentration Risk

As of 2024, these 7 companies made up over 30% of the S&P 500's market cap, which is historically high. This concentration means the index's performance is heavily reliant on just a few tech giants.

4. Broader Market Comparison

Equal-weighted indices (which treat all companies the same regardless of size) have underperformed the cap-weighted S&P 500, showing that many smaller or non-tech stocks haven’t kept pace.

5. Future Outlook

While growth prospects remain strong, especially with AI and cloud computing, valuations may pose risks if earnings don't keep pace.

Broader market breadth may improve if interest rates drop or if cyclical sectors catch up.