The Magnificent Seven: A Deep Dive into the Industry-Leading Stocks that Outperformed the S&P 500 since 2023

The financial markets have been a rollercoaster ride for investors over the past few years. The three major stock indexes, including the S&P 500, have seen their fair share of bear and bull markets. During periods of heightened volatility, investors often seek out the safety of time-tested outperformers. The “Magnificent Seven” stocks have emerged as the go-to investments for many, given their vast outperformance of the S&P 500 since 2023. In this article, we will delve deeper into these seven industry-leading businesses and explore the reasons behind their sustained moats and competitive advantages.

Microsoft (NASDAQ: MSFT)
Microsoft’s Windows operating system remains the undisputed leader in the desktop market. Additionally, Azure, Microsoft’s cloud infrastructure service, ranks second globally. Microsoft’s vast market share in both desktop and cloud markets provides a strong foundation for its continued growth and outperformance.

Apple (NASDAQ: AAPL)
Apple’s iPhone continues to dominate the domestic smartphone market, with a market share of over 50%. Furthermore, Apple’s capital-return program is unrivaled among public companies. Apple’s consistent product innovation and strong brand loyalty have contributed to its impressive growth and outperformance.

Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG)
Alphabet, the parent company of Google, holds a monopoly-like position in the worldwide internet search market, accounting for nearly 92% of the market share in January 2024. Additionally, Alphabet is the parent company of YouTube, the second most-visited social site, and Google Cloud, the global No. 3 in cloud infrastructure service share. Alphabet’s diverse business portfolio and market dominance make it an attractive investment.

Amazon (NASDAQ: AMZN)
Amazon brought in nearly 40% of all U.S. online retail sales in 2022. Furthermore, Amazon Web Services (AWS) is responsible for nearly a third of global cloud infrastructure service share. Amazon’s vast market share in both online retail and cloud infrastructure services positions it for continued growth and outperformance.

Nvidia (NASDAQ: NVDA)
Nvidia’s A100 and H100 graphics processing units (GPUs) are expected to account for around 90% of all artificial intelligence (AI)-inspired GPUs deployed in high-compute data centers in 2024. Nvidia’s leadership in the AI GPU market and its commitment to innovation make it an attractive investment.

Meta Platforms (NASDAQ: META)
Meta Platforms, the parent company of Facebook, holds the top social media “real estate” on the planet. Facebook is the most-visited social site, while Instagram, WhatsApp, and Facebook Messenger, in combination with Facebook, help to collectively draw almost 4 billion users to Meta’s family of apps each month. Meta’s vast user base and its ability to monetize that user base make it an attractive investment.

Tesla (NASDAQ: TSLA)
Tesla is the leading electric vehicle (EV) maker in North America, with nearly 1.85 million EVs produced in 2023. Tesla is also the only pure-play EV manufacturer that is generating a recurring profit based on generally accepted accounting principles (GAAP). Tesla’s leadership in the EV market and its commitment to innovation make it an attractive investment.

In conclusion, the Magnificent Seven stocks have outperformed the S&P 500 since 2023 due to their vast market shares, competitive advantages, and sustained moats. These industry-leading businesses have proven their ability to adapt to changing market conditions and continue to innovate, making them attractive investments for the long term.

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Symbol Last Price Change % Change
AMD 177.66 +7.18 +4.21%
AMZN 171.81 +12.53 +7.87%
GOOG 143.54 +0.83 +0.58%
INTC 42.60 -0.76 -1.75%
META 474.99 +80.21 +20.32%
TSLA 430.93 +12.50 +3.01%

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