Exuberance has reigned supreme atop the stock market’s Olympus since the dawn of this year, with the timeless Dow Jones Industrial Average, the all-encompassing S&P 500, and the tech-driven Nasdaq Composite scaling dizzying heights. Yet, amidst this broad market spectacle, it is the “Magnificent Seven” that have shouldered the weight of these soaring summits.
The “Magnificent Seven” stand as pillars of corporate might, embodying some of the largest and most potent forces in the financial landscape. Arranged by market cap in a regal procession (as of the close of trading on March 5, 2024), this elite club boasts:
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The Unrivaled Dominance of the Magnificent Seven
What sets the Magnificent Seven apart is their unwavering hold on their respective domains.
- Microsoft’s Azure stands tall as the swiftly growing No.2 player in cloud services, while Windows reigns supreme as the global desktop OS king.
- Apple continues to lead the smartphone crusade with a legacy of innovation spanning over a decade, coupled with a share repurchase regimen that stands unparalleled.
- Nvidia is the bedrock of the AI revolution, with its GPUs dominating AI-powered data centers.
- Amazon’s e-commerce kingdom commands nearly 38% of U.S. online retail, alongside AWS reigning as the premier global cloud service provider.
- Alphabet’s Google boasts a near-monopoly with a 92% stranglehold on global internet searches, owning the second most-visited social platform, YouTube, and the third-largest cloud service behind AWS and Azure.
- Meta Platforms embodies the digital omnipresence through Facebook, drawing in nearly 4 billion active users each month across its social realms.
- Tesla, the vanguard of North American EV production, remains the sole profitable pure-play EV entity, hitting close to 1.85 million EVs in the past year.
Amongst these giants, the stock-split stage has often seen many a dazzling performance—excluding Meta, the sole shareholder unity outlier within the Magnificent Seven.
Emerging Titans: The Next Stock Split Prodigies
A “stock split,” a cosmetic maneuver in a corporation’s theatrical repertoire, alters share price and count without moving the market cap or operational needle. The elite Magnificent Seven favor forward splits, shedding light on affordability for retail investors barred from fractional trades.
Since the midpoint of 2021, the grand stage has witnessed the drama of forward splits, headlined by:
- Nvidia: 4-for-1 stock split.
- Amazon: 20-for-1 stock split.
- Alphabet: 20-for-1 stock split.
- Tesla: 3-for-1 stock split.
While Nvidia’s lofty per-share price of nearly $860 may suggest a clear path to the stock-split aisle, menacing clouds gather on the horizon. Recent murmurings indicate a possible bubble scenario in Nvidia’s realm, dampening the split prospects.
Despite Nvidia’s current GPU supremacy in data centers, a storm brews on the horizon as competitors like Advanced Micro Devices charge forth with new AI-GPUs. Intel, too, readies its Gaudi3 AI chip for a grand entrance.
Alarm bells sound louder with Microsoft, Meta Platforms, Amazon, and Alphabet—jointly constituting 40% of Nvidia’s sales—stepping up efforts to birth their potent AI chips, hinting at a switch from Nvidia’s AI throne.
Export scuffles, internal strife, and margin erosion as production ramps beckon a bleak outlook. In this unfolding drama, the anticipated “next split” baton seems poised to pass from Nvidia’s grasp to two other Magnificent Seven luminaries.
Image source: Getty Images.
The Rise of Meta Platforms and Microsoft in the Stock Market
The Unstoppable Meta Platforms
When it comes to the Magnificent Seven, Meta Platforms stands out as a titan in the world of social media. Recently soaring beyond $500 per share for the first time ever, Meta’s value has investors in awe. With a strategic focus on artificial intelligence, particularly in the realm of generative AI, Meta Platforms is positioning itself as a force to be reckoned with.
Known for its array of popular social media platforms including Facebook, WhatsApp, Instagram, and Facebook Messenger, Meta has built an empire on its far-reaching online presence. This wide reach not only entices users but also attracts businesses aiming to maximize their advertising impact.
Boasting a hefty cash reserve exceeding $65 billion, Meta’s CEO, Mark Zuckerberg, is leveraging this financial cushion to take bold risks. Despite operating losses in segments like Reality Labs, Zuckerberg’s ambition to steer Meta into the realm of the metaverse sets the company apart, allowing it unprecedented freedom in the business landscape.
A Unique Position in the Market
Unlike many of its counterparts, Meta Platforms remains surprisingly affordable despite its significant market gains. With shares available at just 13 times the estimated cash flow in 2025, Meta presents investors with a distinct opportunity to tap into a promising future at a reasonable price.
The Microsoft Marvel
Another standout member of the Magnificent Seven, Microsoft, is poised to captivate Wall Street as the next stock-split star. A tech giant of repute, Microsoft has split its shares a remarkable nine times since going public, but has refrained from doing so since February 2003, when its stock soared above $400 per share.
Microsoft’s unparalleled success in attaining a $3 trillion valuation rests on its ability to seamlessly blend legacy segments with high-growth pursuits. Despite dwindling market share for Windows in the desktop OS domain, Microsoft retains its dominant position in personal computing. The robust cash flow from stalwarts like Windows and Office fuels the company’s ventures into innovative territories.
Driving Microsoft’s growth are its forays into cloud services and artificial intelligence (AI). Azure, the company’s cloud service, witnessed a substantial 28% sales surge in a recent fiscal quarter, indicative of a promising future in cloud infrastructure services. Microsoft’s commitment to AI is evident through investments in OpenAI and the integration of AI solutions across various platforms.
Notably, Microsoft holds one of the coveted AAA credit ratings from Standard & Poor’s, underscoring its resilience and stability even in volatile market conditions.
The Microsoft Advantage
With a solid foothold in legacy operations, a strong presence in cloud services, and an unwavering commitment to AI, Microsoft stands out as a beacon of stability and growth potential in the ever-evolving tech landscape.
