Big tech face high bar to sustain gains

The Magnificent Seven group of megacap tech stocks need to deliver stellar earnings to keep outperforming the broader market, according to a growing consensus on Wall Street.

The group – comprised of Apple Inc., Microsoft Corp., Nvidia Corp., Alphabet Inc., Amazon.com Inc., Meta Platforms Inc. and Tesla Inc. – doubled in value in 2023, outperforming the broader Nasdaq 100 Index’s 54% rise. The majority extended gains this year – with the exception of Tesla and Apple.

Optimism about a stronger-than-expected economy, peaking interest rates and artificial intelligence have helped bolster the stocks. Investors are now questioning if gains can be sustained through 2024 and if the grouping of seven will remain intact as their performances differentiate. Tesla has dropped 24% this year, while Meta is up 34%.