The Magnificent 7 are crushing the market again — here is why

The S&P 500 had its best May in over 30 years, thanks largely to the resurgence of the “Magnificent Seven” tech stocks: Apple, Alphabet, Microsoft, Amazon, Meta, Tesla, and Nvidia.

Together, these giants drove 62% of the S&P 500’s gains last month, with Nvidia and Tesla leading the charge – both surged over 20%. Six of the seven outperformed the index’s 6.2% rise, while Apple lagged slightly.

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Why are they soaring?

1. Strong earnings growth – The group’s Q1 earnings jumped 27.7% year-over-year, crushing the rest of the S&P 500’s 9.4% growth. They also beat Wall Street estimates by a wider margin (11.7% vs. 4.6%).
2. Investors flock back to big tech – These stocks rebounded hard after a sell-off earlier this year. As Citi’s Drew Pettit noted, “growth is defensive” in a high-rate environment.
3. Large-cap strength – With bond yields rising, investors prefer stable mega-caps. The Roundhill Magnificent Seven ETF (MAGS) has gained 11% in a month, nearly double the S&P 500’s return.

Bottom line? Big Tech’s momentum is back, and for now, it’s driving the market.