The Magnificent Seven remain as dominant and as popular as ever, with the US tech giants’ aggregate stock market capitalisation combining to hit a new record high of $22.5trn yesterday.
AJ Bell investment director Russ Mould said Alphabet, Amazon, Apple, Meta, Microsoft and Tesla had encouraged investors with a strong earnings season – with only Nvidia remaining to report.
“Investors seem happy to abide by the adage ‘never mind the quality, feel the width’, judging by the generally positive share price reactions to the latest quarterly earnings from Alphabet, Amazon, Apple, Meta, Microsoft, and Tesla, and the ongoing rise in Nvidia for good measure,” he said.
It was a positive month for the tech giants from an earnings perspective, with many producing top results. Matt Britzman, senior equity analyst at Hargreaves Lansdown, said: “Growth was strong across the group, cloud demand accelerated and the message from management was clear: the buildout continues.
“The market was less united on what to make of the spending plans, with investors still trying to balance the scale of the AI opportunity against the cash required to chase it. But the bigger takeaway is that this cycle is nowhere near cooling.”
Alphabet was the “market darling”, he said, with Microsoft struggling to garner much reward from investors for its stellar figures, which included beating analyst forecasts for the fourth straight quarter.
Amazon was broadly on track while Meta “cannot catch a break”, said Britzman, with the stock marked down by investors for spending more in the AI race.
But which of the stocks are most heavily backed by funds? Below, Trustnet counted the number of funds in the IA North America sector with a top 10 position in each of the seven tech behemoths.
Microsoft is the most popular stock among US funds, according to data from FE Analytics, with some 174 IA North America funds including the company in their top 10.
It means some 61.5% of the 283-strong peer group include the S&P 500's third-largest company in their major holdings.
| The most popular Magnificent Seven stocks among IA North America funds | ||
| Magnificent seven stocks | Total number of funds with a top 10 position | Percentage of sector with a top 10 weighting |
| Microsoft | 174 | 61.5% |
| Alphabet | 169 | 59.7% |
| Nvidia | 167 | 59.0% |
| Amazon | 151 | 53.4% |
| Apple | 142 | 50.2% |
| Meta | 111 | 39.2% |
| Tesla | 84 | 29.7% |
Source: Trustnet
The software provider is the most popular stock of the sector, with Google parent company coming in second, sitting in 169 of top-10 lists.
A stock split means Alphabet appears twice in the S&P 500, with two of its share classes appearing in the index's top 10. Its overall weighting between the two classes stands at close to 7% of the index – combining to make it the second-largest US company.
For this study, we did not split out each share class, instead focusing solely on the number of funds where ‘Alphabet’ appears in the top 10. If a fund includes both, it would only have been counted once.
Third came chipmaker Nvidia – the largest company in the S&P 500 – with 167 funds making the stock a top 10 position (59%). Amazon is next (151 or 53.4% of the sector), with Apple (142) also in more than half of the peer group.
The laggards are Meta (111 funds, or 39.2% of the sector) and Tesla (84, or 29.7%). Both have been leapfrogged by Broadcom, which has risen to the seventh-largest stock in the S&P 500, with Meta Platforms in eighth and Tesla in ninth.
All of the stocks above have benefited, however, from the large number of passive options in the IA North America sector. Some 116 (or around 40%) of the peer group invests passively, although not all track the S&P 500.
For example, the single largest position to any of the seven is the 34.2% position that Xtrackers MSCI USA Consumer Discretionary UCITS ETF has in Amazon. The online retailer also makes up around a third of both the State Street SPDR S&P U.S. Consumer Discretionary Select Sector UCITS ETF and iShares S&P 500 Consumer Discretionary Sector UCITS ETF.
Electric vehicle maker Tesla was another to benefit from its consumer discretionary slant, with the same three funds also taking big positions in the Elon Musk-led firm.
This was common throughout the suite. The top holders of Microsoft, Apple and Alphabet were all specialist US quality or technology trackers, as well as many general US exchange-traded funds. Nvidia also proved difficult to overweight: some 18 funds had a double-digit position to the stock, but only three were not ETFs.
But there were some exceptions. Alphabet was widely owned by active funds more than passive, although this may be due to its aggregate weighting – active funds put both share classes together, while passives are more likely to split them out into two.
Meta was the other where some active managers had taken big bets. FTGF ClearBridge US Large Cap Growth has the largest weighting of all at 7.1%, while all six funds with a position of more than 5% were active.