The market’s obsession with “Magnificent Seven” stocks, in one chart

The Magnificent Seven stocks — that is, Apple, Nvidia, Microsoft, Alphabet, Amazon, Meta, and Tesla — account for about 31% of the S&P 500, and probably command an even higher mindshare than that in discussions about publicly traded American companies.

There’s a good reason for that: higher profits are what makes the stock market go up, and right now, effectively all the earnings growth for the benchmark US stock index this reporting period is attributable to this handful of companies.

Wall Street is looking for a convergence in operational outcomes going forward, notes FactSet senior earnings analyst John Butters.

“Analysts predict the companies in the ‘Magnificent Seven’ in aggregate will report double-digit earnings growth over the next five quarters as well,” he wrote. “However, it is interesting to note that analysts believe the other 493 companies in the index will also report double-digit [year-over-year] earnings growth over the next five quarters.”