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Just as Wall Street moved on from the Nifty 50 in the 1970s as the term’s popularity and usefulness waned, the so-called FANG or FAANG stocks have lost their bite. Replacing them in the lexicon du jour is the Magnificent Seven Stocks: Alphabet (GOOGL), Apple (AAPL), Amazon (AMZN), Meta Platforms (META), Microsoft (MSFT), Nvidia (NVDA) and Tesla (TSLA).
From GOOGL, AAPL and AMZN to META, MSFT, NVDA and TSLA, the Magnificent Seven stocks account for around half of the weighting of the Nasdaq.
Unlike the price-weighted Dow Jones Industrial Average, the Nasdaq composite and S&P 500 indexes are market-capitalization weighted.
As a result, the combined market caps of the Magnificent Seven stocks have a disproportional influence on the Nasdaq composite and Nasdaq 100.
To help address this issue, the Nasdaq rebalanced the index on July 24. That reduced the individual weighting of the Magnificent Seven stocks. But the rebalancing simply changed the total weighting of these seven megacaps from over 50% to nearly 50%.
In short, the Nasdaq 100 remains heavily concentrated on these megacap growth stocks. Resurgent gains by Apple, Microsoft, Amazon, Google and the other Magnificent Seven stocks boosted the tech-heavy index as a result.
Toward the end of last year, Nvidia stock, Meta, Microsoft, and Amazon stock all launched recent breakouts. Google stock also popped back into buy range, but has since slipped below that entry.
Now as 2024 begins, many of these tech titans have kicked off the new year with a test as the Nasdaq stumbles then rebounds. While Tesla continues to struggle, the other Magnificent Seven stocks are showing resilience.
Nvidia stock launched a new breakout Monday. Microsoft, Meta and Google stock are testing or finding support around their 21-day exponential moving averages.
Meanwhile, Apple — the largest of the Magnificent Seven stocks — has now fallen below its 50-day line to kick off the year. After getting multiple analyst downgrades, AAPL stock fell but has found support at its 200-day moving average.
How To Invest In Magnificent Seven Stocks In 2024
Here are the current individual market cap weightings of Alphabet, Apple, Amazon, Meta, Microsoft, Nvidia and Tesla. The weightings will, of course, change as their market caps fluctuate.
Follow Matthew Galgani on X (formerly Twitter) at @IBD_MGalgani.
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