The US Magnificent Seven shares appear to have lost some of their lustre with investors.
Many people worry about the concentration risk within the S&P 500 Index (SP: .INX) and whether these companies can maintain their exceptional earnings growth.
There are also fears that ongoing innovation in artificial intelligence (AI) may mean they lose their edge.
We saw that fear play out in January when the market became aware of China's DeepSeek AI product and Nvidia experienced the biggest one-day market cap fall in the US stock market's history.
The chart below shows how the Magnificent Seven stocks have performed in 2025 to date in terms of share price percentage changes.
As you can see, some are up and some are down. It's a mixed result for the group.
Magnificent Seven shares underperforming year-to-date: expert
Apple Inc (NASDAQ: AAPL) shares are performing best, up 19.5% YTD. Tesla Inc (NASDAQ: TSLA) shares are the worst, down 23.6% YTD.
In 2024, all of the Magnificent Seven stocks recorded share price gains.
All but one beat the Nasdaq Composite Index (NASDAQ: .IXIC), which rose by 28.64% over the year.
NVIDIA Corp (NASDAQ: NVDA) shares rose by 171.18%. Meta Platforms Inc (NASDAQ: META) shares surged 65.42%. Tesla shares lifted 62.52%. Amazon.com, Inc. (NASDAQ: AMZN) shares increased by 44.39%. Alphabet Inc (NASDAQ: GOOGL) stock rose by 35.51%. Apple shares rose by 30.07% and Microsoft Corp (NASDAQ: MSFT) shares lifted 12.09%.
Will we see divergent 12-month performances between the Mag 7 stocks in 2025?
Or will the Mag 7 make a course correction somewhere along the way to resume their share price growth ascendancy as a group?
Goldman Sachs is tipping the latter.
Here's what Goldman Sachs thinks
John Flood is the head of Americas Equities Sales Trading in Goldman Sachs' Global Banking & Markets division.
He acknowledges that the Magnificent Seven shares have underperformed in the year to date.
Flood says:
Investors continue to ask whether these stocks are overvalued.
You even hear the word 'bubble' get thrown around.
But Flood says the Magnificent Seven just reported "outstanding" earnings, beating analysts' estimates by 13%.
And after share price falls for some members of the Mag 7 YTD, their valuations are looking more attractive.
Flood says:
With rising earnings and falling stock prices, valuations are now becoming much more reasonable.
He also reckons the Magnificent Seven shares are somewhat insulated from the uncertain global economic backdrop.
They are less reliant on economic growth, which means they can become defensive during uncertain times.
Flood foresees a period of outperformance for the Mag 7 group.
July is typically a powerful month for corporate buybacks, which should be an additional source of demand for these names.
Put it all together, and I'm looking for the Magnificent 7 to outperform the broader market this summer.
