The "Magnificent Seven" are a group of seven of the largest and most influential technology-focused companies. This group includes:
The S&P 500 performed very well from the end of 2015 through 2025, with an overall return of 247.9%. However, it doesn't come close to the Magnificent Seven, which had a staggering 870.1% combined return over that same time span.
It's largely been a bull market over the last decade, which could help explain why this group of growth stocks has been so successful. From 2015 through 2025:
- The Magnificent Seven delivered higher returns than the S&P 500 in eight out of 10 years.
- The biggest difference was in 2020, when the Magnificent Seven had an annual return more than four times higher than the S&P 500 (65.8% to 16.3%).
- The only year in which the S&P 500 performed notably better was 2022, when it declined 19.4%, while the Magnificent Seven fell 41.3%. The S&P 500 also had a slight edge in 2015 (9.5% to 8.8%).
Because it's more diversified and not reliant on a single sector, the S&P 500 tends to weather stock market volatility better. The Magnificent Seven generally aren't as resilient during times of economic uncertainty, as evidenced by their greater losses during down periods, most notably 2022. However, since then, artificial intelligence (AI) has driven growth in the tech sector, helping the Magnificent Seven outpace the S&P 500.
Each company's contribution to the Magnificent Seven has changed since 2015, with some growing more significantly than others.
- Nvidia has been the top performer after adding over $4 trillion to its market cap since the end of 2015. It went from being the smallest contributor to the Magnificent Seven, at just 0.8% of the combined value, to the largest at 21.4%.
- Apple, which spent much of the last decade leading the largest companies by market cap, dropped from first to second in 2025.
- Alphabet, the holding company that owns Google, dropped from second to fourth, but recently bounced back to third.
- Microsoft has dropped from third to fourth after Alphabet's resurgence.
- Amazon, Meta, and Tesla have each dropped by one position in the hierarchy to fifth, sixth, and seventh, respectively.
What the Magnificent Seven dominating the S&P means for investors
Investors who buy S&P 500 index funds sometimes worry about how top-heavy the index is -- a logical concern given that seven companies contribute more than a third of the S&P 500's value.
These companies make up such a large portion of the S&P 500 due to their exceptional success in recent years. Anyone invested in the S&P 500 has shared in that success, so there are advantages to the Magnificent Seven's dominance.
However, the Magnificent Seven don’t come without risks, as seen in 2022. There are a few notable causes for concern, in particular:
- The group is dominated by tech stocks and stocks that are more volatile than the S&P 500 as a whole.
- As a result, the Magnificent Seven are more heavily impacted by bear markets and downturns in the tech sector. Either of those situations will likely drag down the performance of the S&P 500 compared to more equally weighted indexes.
- Growth for the Magnificent Seven could slow due to the size of these companies. Case in point, although the group as a whole outperformed the broader market in 2025, only two of the seven (Alphabet and Nvidia) surpassed the S&P 500's return.
It's possible that the Magnificent Seven will continue their success. Even if some of them fall off, other stocks in the S&P 500 will take their place.
S&P 500 index funds remain a simple and effective way to invest in stocks. If you'd like to diversify your portfolio more, you could opt for a different index fund, a combination of funds, or a self-managed portfolio of companies you select. As the success of the Magnificent Seven shows, it is possible to get market-beating returns by picking quality stocks.
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