Why The Sexy 6 (And The Mag 7) Are The Most Important Stocks On The Planet

Why The Sexy 6 (And The Mag 7) Are The Most Important Stocks On The Planet

We’ll do this week’s chat at the regular time on Wednesday (5/1/24) at 3:00 pm ET in the TradingWithCody.com Chat Room or as always you can email us at support@tradingwithcody.com.

This is Part I of a series of articles breaking down and ranking the AI strategies of the Magnificent 7.

I often talk about how our job as “Revolution Investors” is to find companies that are changing the world and creating trillion-dollar economies as they do so before they go mainstream.

There are seven US-based companies that have been worth a trillion dollars and we have been in six of them for many years, long before they were called the “Magnificent 7” (we also had you all in bitcoin back in 2013 at $120 too!).

Anyway, the “Magnificent 7” — Microsoft (MSFT), Apple (AAPL), NVIDIA (NVDA), Google (GOOG), Amazon (AMZN), Meta (META), and Tesla (TSLA) — are now, by far, the most important stocks on the planet.

The markets themselves, are now largely a reflection of what’s going on with the Mag 7, not the economy. Of course, nothing happens in a vacuum, and the Mag 7 are affected by what’s happening in the economy, but if 2023 taught us anything it is that the revenue and profits of the seven largest tech companies in the world matter a whole lot more than people realized.

Our biggest stock market winners over the years, which include six of the seven greats (AAPL, NVDA, META, GOOG, and TSLA) are now the biggest and most valuable companies on the planet, but they did not start out that way.

For example, when Cody bought Apple, it had a market cap of just over $1 billion. When Cody bought Tesla at a split-adjusted price of $17/share, it had a market cap of about $35 billion. Cody posted a tweet back then comparing Tesla to some of the high-flyers of the day like Beyond Meat (BYND), Zoom (ZM), and Tilray Brands (TLRY):

And it’s amazing to look back and see how those relative market caps have changed, as Cody showed us in the updated tweet yesterday:

The Magnificent 7 have grown in scale to absolutely dominate the rest of the American stock market.

These seven stocks make up about 50% of the weighting in the Nasdaq 100 (QQQ) and about 35% of the S&P 500 (SPY). Today, the combined market cap of the Mag 7 is $13.2 trillion, which is greater than the market cap of the entire Chinese stock market, about 2x greater than that of Japan, and about 4x that of the UK. These seven companies will generate about $2 trillion in revenue in 2024 (which is 8% of US GDP) and about $420 billion in profits.

We invested early in each of these companies (excluding Microsoft), and it is downright astonishing that they have grown to become this large.

As the Mag 7 have now become such an outsized portion of the market, it’s difficult for most investors (including us) to comprehend just how much bigger and more important they are than the rest of the market.

Although these seven companies are not currently the top seven most valuable companies on the planet right now — Saudi Aramco, Berkshire Hathaway (BRK.A), Eli Lilly (LLY), TSMC (TSM), and Broadcom (AVGO) are also in the top twelve — their collective importance matters more than the others for one key reason. Why? Because the Mag 7 are the companies that are building what perhaps will be the most important technology the world has ever seen: Artificial General Intelligence (AGI).