Magnificent Seven Lag in 2025, Raising Concentration Risks
When a small group of stocks dominates an index, a pullback in that group can drag down the entire market.
Quick overview
- The 'Magnificent Seven' tech stocks have shown uneven performance in 2025, with five of the seven lagging behind the broader market.
- While Alphabet and Nvidia posted strong gains of 63% and 30.33% respectively, other major players like Amazon and Meta have underperformed.
- Concerns about concentration risk are rising as these stocks dominate the S&P 500, potentially distorting market perceptions.
- Investors are increasingly shifting towards traditional sectors like energy and financials, raising questions about the future of mega-cap tech dominance.
Although Alphabet and Nvidia posted solid gains, several of Wall Street’s other leading stocks delivered more modest results.
The group of mega-cap technology companies known as the “Magnificent Seven”—Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla—has for years been the main engine of the U.S. stock market. But the picture looks different in 2025.
These seven stocks drove a large share of the S&P 500’s performance and became synonymous with technological leadership, especially during the artificial intelligence (AI) boom. However, the latest data show that their performance this year has been far from stellar. In fact, five of the seven have lagged the broader market so far this year.
Year-to-date performance of the “Magnificent Seven” in 2025:
- Alphabet: +63%
- Nvidia: +30.33%
- Tesla: +13.65%
- Microsoft: +13.53%
- Apple: +11%
- Meta: +10%
- Amazon: +3%
By comparison, the S&P 500 is up 16% and the Nasdaq Composite has gained 20%.
Uneven performance among Big Tech
While companies such as Alphabet and Nvidia have still delivered strong gains, several of the other major names have posted more subdued results—or have underperformed relative to the S&P 500. This partly reflects greater dispersion within the group itself: some tech giants are growing faster than others, and not all are contributing equally to index gains.
This pattern has led some analysts to question the wisdom of concentrating investments solely in these seven names. The fact that some members are no longer among the year’s top performers is striking and contrasts with the extraordinary historical returns that originally justified the label.
Concentration risk and rotation toward traditional sectors
Another growing concern is concentration risk. The combined weight of these stocks now represents a substantial share of the S&P 500, meaning their performance can distort perceptions of the broader market.
When a small group of stocks dominates an index, a pullback in that group can drag down the entire market—even if many other companies are performing well.
At the same time, investors have been rotating toward more traditional or value-oriented sectors, such as energy, industrials, and financials, which have been gaining traction as alternatives to mega-cap tech.
Opinions differ on whether this slowdown is temporary or the start of a deeper shift. On one hand, Goldman Sachs continues to project that the Magnificent Seven will lead earnings growth in 2026, though it also notes signs that broader market participation is beginning to emerge.
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