The Magnificent 7 are finally acting as a group — besides Apple, they’re all tumbling together
Well, perhaps there’s one reason to continue to refer to the Magnificent 7 as an amorphous collective after all. And it’s a bad news story: with the exception of Apple, the group of stocks is trading like a cohesive unit. By falling, a lot.
2024 was a year defined by the ability of these megacap tech companies to trade largely independently of one another, even as most were getting more and more levered to the AI theme, either through sales or capex.
The correlation disinflation between these trillion-dollar companies was one of the most critical factors in keeping overall stock market volatility compressed. That’s gone out the window.
We’ve seen that turn on a dime from the S&P 500’s record highs until now. At the time of the benchmark US stock index’s closing peak, the average correlation between members of the Magnificent 7 over the trailing month was its lowest since 2021. That has since exploded during a market rout that’s been principally characterized by a breakdown in high-flying momentum stocks, especially those tied to AI.
In a crisis, as they say, correlations go to one.
Apple, with just a 34% correlation to the other members of the cohort over the past 21 sessions, is playing the biggest role as a volatility dampener at the moment. But the world’s biggest publicly traded company is just a sandbag in the face of a tsunami at the moment.
Meta, Alphabet, and Amazon all hit fresh 2025 lows this morning.
