Investing in "Magnificent Seven" stocks has proven a reliable way to make big profits. Many of these companies -- Apple, Amazon, Alphabet, Meta Platforms, Microsoft, Nvidia, and Tesla -- have seen their share prices double, triple, or even quadruple in value over just a handful of years. Nasdaq.com
These seven stocks make up 30 percent of the Nasdaq and all are worth close to, or more, a trillion dollars in market cap. The exception being Tesla, that is currently down. I am not here to give market advice, and you should ignore it I do. I just think this is an interesting time. We have seen companies dominate like this before. Railroad companies, Ma Bell and car companies in the past have seen huge numbers, where a small segment makes up a large portion of the stock market, and even the GDP.
So questions arise when you see this happen, that must be considered when looking at the long term value of behemoths like this:
1. Can they continue growth at the rate they have seen? Not likely, as far as stock price or a percentage. What is wild, is that a company like Amazon has gross revenue of around 500 billion. If they grow by even ten percent, that is 50 billion dollars, and yet, Amazon as an investment would see only marginal growth due to their size. That is a lot to ask of a company, just to maintain steady growth.
2. Will government step in to control their growth, like they did with the Bell System? I don't think this is something we will see, as these large companies are so intertwined with government. Between, intermingled hiring practices, corporate handouts, lobbyists, and collusion, I doubt we see any effort from DC to stop these guys.
3. How likely is that some small company can upend what they are doing? This will happen. Who knows it who will be, but, someone is always the next big thing.