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After months of turbulence, the Magnificent Seven or Mag 7 stocks roared in May, posting a collective gain of more than 13% — their best monthly performance in nearly two years. The group comprising Apple (AAPL - Free Report) , Microsoft (MSFT - Free Report) , Alphabet GOOG, (GOOGL - Free Report) , Amazon (AMZN - Free Report) , NVIDIA (NVDA - Free Report) , Tesla (TSLA - Free Report) and Meta Platforms META drove 62% of the S&P 500's gains in May.
As such, Roundhill Magnificent Seven ETF (MAGS - Free Report) , which offers concentrated exposure to the “Magnificent Seven” stocks, is up 10% over the past month, almost doubling the broad market fund (SPY - Free Report) .
NVIDIA and Tesla led the charge, each surging more than 20%. Notably, NVDA reclaimed the position of the world’s most valuable company, boasting a market capitalization of $3.45 trillion. The AI darling surpassed Microsoft once again in a meteoric run, driven by unrelenting demand for its artificial intelligence (AI) hardware. Yet, despite the solid rally, the group remains in negative territory year to date (read: ETFs to Bet On as NVIDIA Reclaims Market Cap Crown).
We have cited several reasons for the solid performances that are expected to continue in the coming months as well:
Superior Earnings Growth: Total first-quarter earnings for Mag 7 are expected to be up 27.2% on 12.2% higher revenues, per the Earnings Trends report. For 2025, the group’s earnings are expected to increase by 11.9% on 7.9% higher revenues. Excluding the Mag 7 contribution, total earnings for the remaining S&P 500 companies are expected to grow 5.8% in 2025, which compares to 3.9% growth in 2024.
The Mag 7 companies are currently expected to bring in 24.2% of total S&P 500 earnings in 2025 and account for 31.6% of the index’s total market capitalization.
AI Boom: Though the artificial intelligence (AI) trade has cooled off significantly this year, its adoption will again provide a lift to tech stocks. The latest earnings reports from some of the Mag 7 underscore that strong demand for AI is helping companies navigate tariff-driven economic uncertainty. The expansion of AI applications holds the promise of ushering in fresh opportunities for growth within the sector. Tech companies have poured billions into data centers and AI chips to support the growth of AI models (read: Why Big Tech Stocks Are Powering Market Gains Again).
Defensive Play: With rates still high and volatility lingering, these mega-cap tech names are proving to be the market’s new safe haven. Magnificent Seven stocks will continue to act as a defensive play amid market uncertainty. These stocks' dominance in terms of earnings strength, cash flow resilience and market leadership positions them as anchors during periods of volatility.
Solid Fundamentals: These mega-cap tech stocks have superior fundamentals compared to the rest of the S&P 500. They boast faster growth rates, higher profit margins, cleaner balance sheets and reasonable valuations (see: all the Technology ETFs here).
Analyst Upgrades: Companies like Amazon and Meta received price-target hikes from analysts, citing factors such as eased U.S.-China tariffs and strong company performance. Amazon's diversified revenue streams and Meta's stable advertising business were highlighted as growth drivers.
Any Challenges Ahead?
With the recent rebound, valuations for the Mag 7 have climbed sharply. The group’s median forward price-to-earnings (P/E) ratio was approximately 28, up from a low of 22.2 in April, according to LSEG Datastream. In comparison, the broader S&P 500 is trading at a forward P/E of 21.4.
Additionally, the race to invest in AI infrastructure is leading to increased capital expenditures. This could put pressure on profit margins, especially if the anticipated returns from AI investments take longer to materialize. Further, renewed U.S.-China trade tensions and export restrictions, particularly targeting AI chips, are the major dampeners to the profitability of Mag 7.
MAGS in Focus
Roundhill Magnificent Seven ETF is the first-ever ETF that offers investors equal-weight exposure to Magnificent Seven stocks. It has amassed $2.3 billion in its asset base and charges 29 bps in fees per year. MAGS trades in an average daily volume of 2.4 million shares.
Other ETFs
MicroSectors FANG+ ETN (FNGS): This ETN is linked to the performance of the NYSE FANG+ Index, which is equal-dollar weighted and designed to provide exposure to a group of highly traded growth stocks of next-generation technology and tech-enabled companies. The note accounts for a 10% share in each of the seven stocks. MicroSectors FANG+ ETN has a Zacks ETF Rank #3 (Hold) (read: Google's Black Swan Event and a 25% Loss: ETFs to Consider).
Vanguard Mega Cap Growth ETF (MGK - Free Report) ): It tracks the CRSP US Mega Cap Growth Index. It holds 69 securities in its basket, with the “Magnificent Seven” collectively accounting for 53% of the total assets. MGK has a Zacks ETF Rank #3.
Invesco S&P 500 Top 50 ETF (XLG - Free Report) ): Invesco S&P 500 Top 50 ETF measures the cap-weighted performance of the largest companies on the S&P 500 Index, reflecting the performance of the U.S. mega-cap stocks. It holds 53 stocks in its basket, with the “Magnificent Seven” accounting for a combined 53.6% share. XLG has a Zacks ETF Rank #2 (Buy).
iShares S&P 100 ETF (OEF - Free Report) ): iShares S&P 100 ETF offers exposure to the 101 largest U.S. companies. The Mag 7 stocks account for a combined 44.7% share. OEF has a Zacks ETF Rank #2 (Buy).
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Mag 7 ETFs Surge: Will the Rally Keep Rolling?
After months of turbulence, the Magnificent Seven or Mag 7 stocks roared in May, posting a collective gain of more than 13% — their best monthly performance in nearly two years. The group comprising Apple (AAPL - Free Report) , Microsoft (MSFT - Free Report) , Alphabet GOOG, (GOOGL - Free Report) , Amazon (AMZN - Free Report) , NVIDIA (NVDA - Free Report) , Tesla (TSLA - Free Report) and Meta Platforms META drove 62% of the S&P 500's gains in May.
As such, Roundhill Magnificent Seven ETF (MAGS - Free Report) , which offers concentrated exposure to the “Magnificent Seven” stocks, is up 10% over the past month, almost doubling the broad market fund (SPY - Free Report) .
NVIDIA and Tesla led the charge, each surging more than 20%. Notably, NVDA reclaimed the position of the world’s most valuable company, boasting a market capitalization of $3.45 trillion. The AI darling surpassed Microsoft once again in a meteoric run, driven by unrelenting demand for its artificial intelligence (AI) hardware. Yet, despite the solid rally, the group remains in negative territory year to date (read: ETFs to Bet On as NVIDIA Reclaims Market Cap Crown).
We have cited several reasons for the solid performances that are expected to continue in the coming months as well:
Superior Earnings Growth: Total first-quarter earnings for Mag 7 are expected to be up 27.2% on 12.2% higher revenues, per the Earnings Trends report. For 2025, the group’s earnings are expected to increase by 11.9% on 7.9% higher revenues. Excluding the Mag 7 contribution, total earnings for the remaining S&P 500 companies are expected to grow 5.8% in 2025, which compares to 3.9% growth in 2024.
The Mag 7 companies are currently expected to bring in 24.2% of total S&P 500 earnings in 2025 and account for 31.6% of the index’s total market capitalization.
AI Boom: Though the artificial intelligence (AI) trade has cooled off significantly this year, its adoption will again provide a lift to tech stocks. The latest earnings reports from some of the Mag 7 underscore that strong demand for AI is helping companies navigate tariff-driven economic uncertainty. The expansion of AI applications holds the promise of ushering in fresh opportunities for growth within the sector. Tech companies have poured billions into data centers and AI chips to support the growth of AI models (read: Why Big Tech Stocks Are Powering Market Gains Again).
Defensive Play: With rates still high and volatility lingering, these mega-cap tech names are proving to be the market’s new safe haven. Magnificent Seven stocks will continue to act as a defensive play amid market uncertainty. These stocks' dominance in terms of earnings strength, cash flow resilience and market leadership positions them as anchors during periods of volatility.
Solid Fundamentals: These mega-cap tech stocks have superior fundamentals compared to the rest of the S&P 500. They boast faster growth rates, higher profit margins, cleaner balance sheets and reasonable valuations (see: all the Technology ETFs here).
Analyst Upgrades: Companies like Amazon and Meta received price-target hikes from analysts, citing factors such as eased U.S.-China tariffs and strong company performance. Amazon's diversified revenue streams and Meta's stable advertising business were highlighted as growth drivers.
Any Challenges Ahead?
With the recent rebound, valuations for the Mag 7 have climbed sharply. The group’s median forward price-to-earnings (P/E) ratio was approximately 28, up from a low of 22.2 in April, according to LSEG Datastream. In comparison, the broader S&P 500 is trading at a forward P/E of 21.4.
Additionally, the race to invest in AI infrastructure is leading to increased capital expenditures. This could put pressure on profit margins, especially if the anticipated returns from AI investments take longer to materialize. Further, renewed U.S.-China trade tensions and export restrictions, particularly targeting AI chips, are the major dampeners to the profitability of Mag 7.
MAGS in Focus
Roundhill Magnificent Seven ETF is the first-ever ETF that offers investors equal-weight exposure to Magnificent Seven stocks. It has amassed $2.3 billion in its asset base and charges 29 bps in fees per year. MAGS trades in an average daily volume of 2.4 million shares.
Other ETFs
MicroSectors FANG+ ETN (FNGS): This ETN is linked to the performance of the NYSE FANG+ Index, which is equal-dollar weighted and designed to provide exposure to a group of highly traded growth stocks of next-generation technology and tech-enabled companies. The note accounts for a 10% share in each of the seven stocks. MicroSectors FANG+ ETN has a Zacks ETF Rank #3 (Hold) (read: Google's Black Swan Event and a 25% Loss: ETFs to Consider).
Vanguard Mega Cap Growth ETF (MGK - Free Report) ): It tracks the CRSP US Mega Cap Growth Index. It holds 69 securities in its basket, with the “Magnificent Seven” collectively accounting for 53% of the total assets. MGK has a Zacks ETF Rank #3.
Invesco S&P 500 Top 50 ETF (XLG - Free Report) ): Invesco S&P 500 Top 50 ETF measures the cap-weighted performance of the largest companies on the S&P 500 Index, reflecting the performance of the U.S. mega-cap stocks. It holds 53 stocks in its basket, with the “Magnificent Seven” accounting for a combined 53.6% share. XLG has a Zacks ETF Rank #2 (Buy).
iShares S&P 100 ETF (OEF - Free Report) ): iShares S&P 100 ETF offers exposure to the 101 largest U.S. companies. The Mag 7 stocks account for a combined 44.7% share. OEF has a Zacks ETF Rank #2 (Buy).