The "Magnificent Seven" describes the seven biggest technology-focused companies that have led the market's returns in recent years. Bank of America (BAC +0.96%) analyst Michael Hartnett coined the phrase based on the Western film with the same name (originally made in 1960 and remade in 2016).
This update on the term FAANG stocks encompasses more of the top companies capitalizing on technology megatrends. Here's a look at the Magnificent Seven stocks and whether they are good investments right now.
What are the Magnificent Seven stocks?
The Magnificent Seven stocks are seven of the largest technology-focused companies by market cap.
| Name and ticker | Market cap | Dividend yield | Industry |
|---|---|---|---|
| Apple (NASDAQ:AAPL) | $4.0 trillion | 0.38% | Technology Hardware, Storage and Peripherals |
| Alphabet (NASDAQ:GOOG) | $3.4 trillion | 0.29% | Interactive Media and Services |
| Amazon (NASDAQ:AMZN) | $2.6 trillion | 0.00% | Multiline Retail |
| Meta Platforms (NASDAQ:META) | $1.6 trillion | 0.32% | Interactive Media and Services |
| Nvidia (NASDAQ:NVDA) | $4.9 trillion | 0.02% | Semiconductors and Semiconductor Equipment |
| Microsoft (NASDAQ:MSFT) | $3.8 trillion | 0.64% | Software |
| Tesla (NASDAQ:TSLA) | $1.5 trillion | 0.00% | Automobiles |
All seven companies are focused on capitalizing on large technology-driven growth trends. But technically speaking, five are tech stocks, and two are tech-focused consumer discretionary stocks.
They're leaders in the fields of artificial intelligence (AI), cloud computing, video games, social media, digital advertising, software, hardware, e-commerce, and electric vehicles (EVs). These technology trends are driving outsized growth for companies focused on them.
Should I invest in the Magnificent Seven?
The Magnificent Seven stocks have delivered magnificent returns. As a group, these seven stocks delivered a 40% return over the last 12 months (as of early October 2025). That compares to the nearly 17% return delivered by the S&P 500.
Magnificent Seven stocks have delivered market-crushing returns over the past decade:
Overall, the group has delivered a 38.7% average annualized return over the last 10 years, more than three times higher than the S&P 500 (12.8%).
Many investors believe this group of mega-cap stocks can continue producing dominant returns. They're capitalizing on several technology megatrends that should enable them to continue growing at outsize rates. For example, many businesses are still in the early stages of digital transformation (bringing their business processes into the cloud).
This trend could drive growing demand for cloud services for years, benefiting cloud titans Microsoft (MSFT -1.51%), Alphabet (GOOG +0.00%)(GOOGL -0.07%), and Amazon (AMZN +9.77%). Meanwhile, consumers continue to embrace technology, driving demand for tech-driven consumer products and services, like Apple's (AAPL -0.31%) iPhones, Microsoft's Xbox, Amazon's e-commerce store, and Tesla's (TSLA +3.75%) EVs.
Those consumer trends are also shifting more ad dollars online, benefitting Meta (META -2.62%), Microsoft, and Alphabet. Finally, AI is still in the very early stages of what could be an extraordinary growth cycle, providing a boost to Nvidia (NVDA -0.20%), Microsoft, Alphabet, and Meta.
Given the Magnificent Seven's still-untapped growth potential, investors should consider adding one or more of them to their portfolios. An alternative way to invest in stocks like the Magnificent Seven is to buy an exchange-traded fund (ETF) with meaningful exposure to those tech titans.
For example, the Roundhill Magnificent Seven ETF (MAGS +1.51%) focuses solely on investing in the Magnificent Seven. Alternatively, the Invesco QQQ Trust (QQQ +0.48%) focuses on the tech-heavy Nasdaq-100. The Magnificent Seven were all among its top 10 holdings in late 2025 and totaled almost 45% of its total assets.
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Risks of investing in the Magnificent Seven
Although the Magnificent Seven are among the world's largest and financially strongest companies, they're not without risk. Here are some risk factors to consider before investing in the Magnificent Seven:
- High valuations: After their market-smashing returns in recent years, the group traded at a premium price. In late 2025, the Magnificent Seven traded at price-to-earnings (P/E) ratios of over 25 times (Alphabet) to more than 250 times (Tesla), with most trading at more than 35 times earnings. That was higher than the S&P 500's P/E ratio (25.5 times) and a bit more than the tech-heavy Nasdaq-100 (around 33 times). If their growth slows, shares of the Manificent Seven could tumble.
- Cyclical nature of tech spending: If there's a recession and economic growth slows, it could significantly affect the growth of the Magnificent Seven.
- Law of large numbers: Given their mammoth sizes, it will likely be challenging for the Magnificent Seven to deliver sustained above-average growth in the years ahead unless a new tech trend emerges that accelerates their growth (like AI). If growth slows, it could take some of the premium out of their share prices. Even a whiff of slower growth could weigh heavily on the group.
- Potential antitrust concerns: Governments might reject future acquisitions they attempt -- much like Microsoft's long road to acquire Activision and Nvidia's blocked deal for Arm Holdings (ARM +2.64%). If regulators block future deals, it could slow the companies' growth. Meanwhile, due to antitrust concerns, the federal government could eventually force some of the Magnificent Seven to break up.
How to Buy Magnificent 7 Stocks?
Anyone can invest in the Magnificent Seven stocks. Here's a step-by-step guide on how to add them to your portfolio:
- Open your brokerage app: Log in to your brokerage account where you handle your investments.
- Search for the stock: Enter the ticker or company name into the search bar to bring up the stock's trading page.
- Decide how many shares to buy: Consider your investment goals and how much of your portfolio you want to allocate to this stock.
- Select order type: Choose between a market order to buy at the current price or a limit order to specify the maximum price you're willing to pay.
- Submit your order: Confirm the details and submit your buy order.
- Review your purchase: Check your portfolio to ensure your order was filled as expected and adjust your investment strategy accordingly.
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The bottom line on the Magnificent Seven
The Magnificent Seven stocks have delivered magnificent returns over the years. These tech-focused companies have capitalized on many of the biggest technological growth trends, enabling them to grow rapidly and produce strong returns for their investors.
While they're in excellent positions to continue growing rapidly in the future, they're not without risk. Investors must understand the risks before loading their portfolios with these seven stocks.
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