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On the Mark: The Magnificent 7 or the Magnificent 24?

On the Mark: The Magnificent 7 or the Magnificent 24?

April 17, 2024

On the Mark: The Magnificent 7 or the Magnificent 24?

The “Magnificent Seven”

The “Magnificent Seven” (Mag 7) refers to seven leading U.S. companies associated with big technology trends like artificial intelligence, cloud computing, and high-performance computer chips. These companies comprise almost 30% of the S&P 500. Compared to the past, this is a very high concentration in a small number of companies. Their high concentration, along with their high valuations, have led some investors to eschew equity markets. We find that the Mag 7 are not as concentrated as some might think, and they may be worth their high valuations. However, investors should be cautious about having too much exposure to the Mag 7 because investing in companies with extremely high expectations can be risky. Instead of avoiding the Mag 7, we suggest diversifying to non-U.S. equity markets, which offer geographic and sector diversification.

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