Growth stocks, including the previously famed Magnificent Seven, started 2025 in inauspicious fashion. They’ve shed a staggering $1.5 trillion in combined market value since the start of the year. In fact, Monday was the worst day for the group since July.
There’s no denying that’s a massive number — one that cannot be ignore and one that makes it difficult to make excuses for the Mag Seven. However, there may be some silver lining to portend potential rebounds for those stocks and exchange traded funds such as the Invesco QQQ Trust (QQQ ) and the Invesco NASDAQ 100 ETF (QQQM ).
The year-to-date showings of Magnificent Seven stocks aren’t anything to brag about. However, some market observers view the group’s performance as an inevitable, healthy correction rather than an indictment of fundamentals. Second, one of the biggest headwinds megacap growth stocks are contending with this year is White House policy — a factor some analysts believe will ease as 2025 moves along.
Mag Seven Valuations Getting Appealing
There’s another silver lining in the Magnificent Seven retrenchment. Valuations on the often high-multiple group are less demanding today than they were just a few months ago.
“Today, four of the Magnificent Seven are rated 4 stars by Morningstar analysts, meaning they’re considered undervalued: Meta, Amazon, Microsoft, and Alphabet. Alphabet is currently trading at the largest discount (30%),” noted Morningstar analyst Sarah Hansen.
Four- or five-star ratings imply the stocks in question have attractive values. Hansen points out that Nvidia (NVDA) and Tesla (TSLA) are fairly valued while Apple (AAPL) is the only Magnificent member that Morningstar classifies as overvalued.
There are other stock-specific variables that could rejuvenate the various members of the Magnificent Seven as 2025 goes along. Take the example of Tesla. This stock’s been drubbed as CEO Elon Musk has become the face of Department of Government Efficiency (DOGE). Investors are increasingly vocal in demands that Musk refocus his energy on Tesla and leave DOGE to someone else. Musk admitted it hasn’t been easy running DOGE and his suite of companies. While the candor is admirable, it could also be a sign that he should focus on Tesla.
“Investors have grown wary over Musk’s ability to split his time between his companies and the Department of Government Efficiency, especially after Musk admitted on Monday that he was running his companies alongside the government task force ‘with great difficulty,” reported Taylor Herzlich for The New York Post.
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