Investors have witnessed the “Magnificent Seven” stocks wield their influence on the market over the past year, propelled by dominant market positions and ties to artificial intelligence (AI). These high-profile stocks became darlings of the investment world, but a shift has emerged in 2024. While some members maintain their strong performance, others have stumbled along the way.
Against this backdrop, social media powerhouse Meta Platforms (NASDAQ: META) experienced a 3.1% climb, e-commerce giant Amazon (NASDAQ: AMZN) saw a matching 3.1% rise in its shares, while electric vehicle specialist Tesla (NASDAQ: TSLA) stumbled, dropping 1.9% as of 1:45 p.m. ET.
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Positive Drivers
Meta Platforms investors found renewed optimism today as the social media giant responded adeptly to allegations by the U.S. Federal Trade Commission (FTC) regarding a 2020 privacy agreement violation. Despite FTC attempts to tighten the agreement, Meta’s voluntary disclosure of technical errors in its Messenger Kids app helped assuage investor concerns. The FTC’s potential additional restrictions could imply higher costs for the company, but investors welcomed Meta’s proactive stance.
Concurrently, Amazon’s stock dynamics were triggered by reports of job cuts within its Amazon Web Services (AWS) cloud computing division, aimed at cost reduction. The company’s streamlining efforts, including the elimination of its “Just Walk Out” technology in Amazon Fresh stores in favor of cost-effective smart shopping carts, were favorably received by investors.
Conversely, Tesla faced headwinds with reports of price slashes on its popular Model Y vehicle in a bid to clear excess inventory. The company’s decision to scrap a long-planned lower-cost model project also raised skepticism among investors despite CEO Elon Musk’s attempts to dispel concerns on social media.
Signs of Divergence
The concept of the Magnificent Seven soaring in unison witnessed a shift in 2024, with Meta, Amazon, Nvidia, Microsoft, and Alphabet outpacing the S&P 500, while Tesla and Apple lag behind. Meta stands out as the most attractively valued among the trio mentioned, with a forward earnings multiple of just 26, compared to Amazon’s 44 and Tesla’s 59.
Although the potential remains for all seven stocks to lead the market once more, investors now demand tangible business performance to fuel further growth.
Considering Investment in Meta Platforms
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