
A Wednesday slide by Google parent Alphabet (GOOGL) notwithstanding, the Magnificent Seven stocks have been impressive in recent weeks, as highlighted by a 14.07% gain over the past month by the Nasdaq-100 Index (NDX).
That’s been to the delight of investors holding the Invesco QQQ Trust (QQQ ) and the Invesco NASDAQ 100 ETF (QQQM ). That’s because those ETFs track NDX, thus devoting massive percentages of their weights to the Magnificent Seven. It’s premature to say that the Mag 7’s go-go days of 2023 and last year are back. But it also can’t be ignored that several of these names have been driving the broader market higher of late.
It appears that stocks put in a near-term bottom on April 8. Since then, the top five performers have been Microsoft (MSFT), Nvidia (NVDA), Apple (AAPL), Broadcom (AVGO), and Meta Platforms (META). Broadcom isn’t a Magnificent Seven member, but it’s “Mag 7 adjacent,” and it is a QQQ/QQQM holding. Now it’s time for the Magnificent Seven and other QQQ/QQQM linchpins to prove their recent bullishness is durable.
Durability Is Possible
Time will tell, but the recent upside notched by QQQ and QQQM could be a sign of more to come.
“Strategists say that while the resurgence of the Magnificent Seven was a major shift from the first months of the year, there are good reasons for the bounce. The largest tech players have structural advantages that make them especially attractive for investors during volatile moments,” noted Morningstar analyst Sarah Hansen.
One way of looking at the above is that the first-quarter slump experienced by mega-cap growth stocks was more the result of U.S. tariff policy and other macroeconomic headwinds than it was negative commentary on the fundamentals of individual QQQ/QQQM components, Magnificent Seven or otherwise. Those sturdy fundamentals were on display during recent earnings reports.
“Firms like Microsoft and Apple also delivered strong earnings results for the first quarter and relatively positive guidance for the year ahead, according to Morningstar’s analysts, even amid an uncertain trade landscape,” added Hansen.
Strong fundamentals are intact and many retail investors are renewing their affinity for mega-cap growth. So it’s possible the recent upside moves by QQQ/QQQM prove durable. That thesis could be tested by another bout of tariff-induced volatility that sends market participants fleeing back to the trades that worked in the first quarter. Those include value and international stocks. Of course, there’s no guarantee that turbulence will return.
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