Do the "Magnificent 7" tech stocks make sense to invest in?

For the past two years, a group of large tech stocks, such as Tesla and Nvidia, have controlled the stock market

In 2025, though, how should one go about making investments in the industry?

The stock market is now dominated by large tech stocks, especially the Magnificent Seven.

Around a fifth of the SandP 500 was made up of seven tech companies at the beginning of 2023. Two years after consistently ranking among the world's most-bought stocks, the Magnificent Seven now make up about 33% of the S&P 500 index.

Due to this saturation, all investors are essentially exposed to these large tech stocks. All stock market tracker funds, such as those that will probably make up a sizable portion of your pension, will be heavily exposed to the Magnificent Seven group, whether or not you directly own them.

However, as a result of this oversaturation, the markets are putting more and more pressure on these stocks to perform, which in this case means consistently posting high earnings growth numbers. Because investors are used to seeing large tech stocks increase in value quickly, these stocks are closely watched.

"On a good day for the markets, investors are no longer racing ahead in unison and are instead beginning to drill down into more details for each of the seven stocks," says Dan Coatsworth, an investment analyst at AJ Bell. Considerations include economic challenges, antitrust issues, regulatory pressures, and escalating competition.

Knowing the Magnificent Seven large tech stocks as individuals rather than as a group is therefore more important than ever.

Magnificent Seven stocks: who are they?

The Magnificent Seven, also known as Mag7, are seven large tech companies that are regarded by the investing community as the best examples of artificial intelligence (AI) in particular and technology in general.

They are:

Alphabet (NASDAQ:GOOGL), the parent company of Google, along with other businesses like the AI developers DeepMind and Anthropic; Amazon (NASDAQ:AMZN), which started out as an online bookstore but is now a giant in e-commerce and cloud computing through Amazon Web Services (AWS); Apple (NASDAQ:AAPL), the tech hardware company that brought the world the MacBook and the iPhone; Meta (NASDAQ:META), which was once Facebook and is now heavily focused on Metaverse technology and AI products like the Llama model; Microsoft (NASDAQ:MSFT), the computing behemoth behind the Windows operating system and the Azure cloud platform; Nvidia (NASDAQ:NVDA), the hardware developer that invented GPUs, the chips that power AI data centers; and Tesla (NASDAQ:TSLA), the electric vehicle (EV) manufacturer that, according to CEO Elon Musk, is working to master autonomous driving. Michael Hartnett, an analyst at Bank of America, first used the phrase "Magnificent Seven" in 2023. In the wake of the tech and AI stock frenzy that followed ChatGPT's public debut in late November 2022, the group was already beginning to control the stock market by that point.

Even though every company is unique, most, if not all, of the group share certain general characteristics.

All areor have beenextremely inventive; Tesla has proven that EVs are feasible, Meta popularized social media, and Apple's products have transformed personal computing.

Also, the majority are very diverse. Even though companies like Meta or Amazon gained notoriety for a particular product, they now have their hands in many different technological pies, with cloud computing and artificial intelligence being two of their favorites.

Though in different ways and to differing degrees, all of the group's businesses are engaged in artificial intelligence (Apple, for instance, has come under fire for not producing its own AI products as quickly as its competitors).

Their dominance in the stock market, however, is their main similarity. They currently make up seven of the top eight companies in the world by market capitalization, with Tesla being the smallest by that measure, valued at an astounding £1.14 trillion.

Magnificent Seven news as of late.

When Chinese AI start-up DeepSeek surfaced as a less expensive substitute for ChatGPT in late January, the Magnificent Seven as a whole and the larger US stock market were taken by surprise.

As can be seen, however, DeepSeek had varying effects on the different stocks.

The alphabet.

Following the announcement that DeepSeek was able to outperform ChatGPT at a fraction of its financial and compute costs, Alphabet's share price dropped 40.2 percent on January 27.

"Google has expressed internal concerns that OpenSource AI weakens their business moat," stated Tom Bailey, HANetf's head of research.

Following an earnings report that showed a slowdown in the growth of cloud revenue from Alphabet's vital Google Cloud Platform segment, the stock fell even more on February 5. While GOOGL's stock has increased 15.5 percent in the last six months, it has lost 2.2 percent so far this year.

Aside from the disruption caused by AI, Alphabet faces the threat of Google's dissolution after a US court ruled in August that the company's search engine is a monopoly. Long-term threats to Google's core search business from AI are another worry.

Amazon.

When Amazon revealed its earnings on February 6, investors were more worried about a slowdown in cloud revenue growth than the headline numbers, just like they were with Alphabet. The next day, investors were pessimistic about the long-term effects of DeepSeek's reduced AI compute requirements on AWS prospects, which caused Amazon's shares to drop 4 points.

The share price of Amazon, however, has increased 34.4 percent in the six months ending February 14.

Mac.

The price of Apple's stock has increased by 10.3% in the six months ending February 14th, but it has decreased by 2.3% since the beginning of 2025. Apple's position as the most valuable company in the world was solidified by the DeepSeek shake-up; on January 27, its shares increased 31.2 percent, while competitors Microsoft and Nvidia pulled back.

However, the stock has been pressured by declining iPhone sales, especially in China, which was reflected in its Q1 2025 earnings, which were released on January 30. Following the announcement, Apple's stock dropped 0.5 percent in post-hours trading.

Meta.

The price of Metas' stock is presently experiencing one of the longest winning streaks in the history of the stock market; on February 14, Meta's stock increased for the twentieth straight session.

With Metas shares up 25.8% so far this year and 39.9% so far in the last six months, the company is currently leading the Magnificent Seven pack.

This can be attributed in large part to Meta's reputation as a winner following DeepSeek's debut in the AI space.

Following the stock's 1.9 percent gain on January 27, Kate Leaman, chief market analyst at AvaTrade, wrote, "Unlike its tech competitors, it was able to withstand the global sell-off in tech stocks thanks to its metas scale, data advantage, and integration of AI into products like advertising and the metaverse."

After CEO Mark Zuckerberg reaffirmed his belief that positioning tools like Llama, Metas AI LLM, which DeepSeek accessed via the open source model, were the best course of action for the company in the long run, Metas' share price increased 1 point 6 percent the day after its earnings release on January 29.

MS.

Despite reporting better-than-expected earnings on January 29, Microsoft's share price dropped 6.2 percent the next day.

Being a significant investor in OpenAI, Microsoft is especially susceptible to DeepSeek's potentially disruptive influence. Lower-compute AI may also disrupt its Azure cloud business, which investors were concerned about because the division's growth had slowed in the previous quarter, similar to what happened with Alphabet and Amazon.

Microsoft's stock is down 31% so far this year and 21% over the last six months.

GPU.

Nvidia's share price dropped 17% on January 27, making it appear to be the Magnificent Seven stock that stands to lose the most from DeepSeeks' rise.

The issue for Nvidia is that, as demand for its extremely complex GPUs has increased due to gen AI, its share price has skyrocketed. However, the long-term sales growth that has been priced into the stock may not materialize if generative AI models can be created independently of these.

The largest single-day market cap decline in stock market history occurred on January 27, when Nvidia's share price dropped by almost £600 billion. However, shares have still increased by 15.8% over the last six months.

Tesla.

Tesla's share price increased 4% in after-hours trading and is up 76.7 percent over the last six months, despite falling short of revenue and earnings projections when it released its most recent results. However, missed delivery numbers have caused Tesla shares to drop 11.9 percent so far this year.

CEO Elon Musk pledged that the company would make major advancements this year in autonomous robotaxis and affordable EVs, the latter of which is thought to be crucial to justifying the company's enormous valuation in relation to earnings.

Does investing in the Magnificent Seven make sense?

In light of everything, is it wise to purchase Mag7 stocks?

Naturally, the answer will vary depending on your unique situation, investing objectives, and risk tolerance, but it's important to keep in mind that, despite being large, well-established, and extremely successful companies, big tech stocks should be avoided due to their oversaturation in the stock market and strained valuations.

"Investing in the Magnificent Seven necessitates evaluating the potential positives and negatives of each company," Coatsworth says. The next step is to examine valuations, determining whether they are reasonable, costly, or inexpensive in relation to the growth that is available and taking into account the risks and possible rewards.