SUMMARY
- The Magnificent Seven companies—Apple, Microsoft, Nvidia, Amazon, Alphabet, Meta, and Tesla—continue to show strong earnings growth and remain a top contributor to the S&P 500’s earnings growth estimates for 2025. For 2025, their earnings growth is expected around 17%, down from about 37% in 2024, while the rest of the S&P 500 (the other 493 companies) is expected to grow earnings roughly 9%. The Magnificent Seven’s share of total S&P 500 earnings growth contribution is expected to decline from over 50% in 2024 to approximately one-third in 2025 and further in 2026.
- The Magnificent Seven trade at a significant premium to the broader S&P 500. Their forward price-to-earnings (P/E) ratio is at 28x, compared to about 22x for the overall S&P 500 and closer to 21x for the S&P 493.
- The rest of the S&P 493 companies have more sensitivity to economic growth and trade policy risks, which could favor their performance relative to the Magnificent Seven in some scenarios. However, the Magnificent Seven’s size, scale, and strong margins give them a competitive advantage in uncertain conditions. This week, Meta, Apple and Microsoft report earnings.
DISCLOSURES
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