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The Biggest Risk of Investing in ‘Magnificent 7’ Stocks Like Nvidia and Amazon, According to Top CEOs
What’s a glitzy investment conference without a little “Magnificent Seven” banter?
“The risk is simple – these stocks are not going to do well,” Avenue Capital Group founder and CEO Marc Lasry told Yahoo Finance at the Milken Institute Global Conference on Monday.
Lasry was responding to a question about the risk of overcrowding at tech names like Nvidia (NVDA),Microsoft (MSFT), Litter (AAPL), Amazon (AMZN), Google (GOOG, Google), goal (GOAL) and Tesla (TSLA) – also known as the Magnificent Seven.
“What has happened is that when people are nervous, they invest in things they know very well and believe will be available,” Lasry added. “But I don’t know what’s going to happen next year. I know on the credit side, you’re going to have all these opportunities.”
Apollo CEO Marc Rowan (right) talks markets and Mag Seven with Yahoo Finance Executive Editor Brian Sozzi (left) at the Milken conference. (Yahoo Finance)
A former co-owner of the Milwaukee Bucks, Lasry has been investing in the credit markets for more than four decades, giving him a reported net worth of $1.9 billion.
Suffice to say, Lasry has seen some investment cycles and market manias.
And the Magnificent Seven could be seen as a craze.
In all, Magnificent Seven stocks accounted for about 37% of the S&P 500’s 10.2% gain in the first quarter, according to data from S&P Global Indices. By 2023, the cohort constituted about two-thirds of the S&P 500’s advance.
Optimism in the group reflects enthusiasm for profit in everything from Nvidia’s AI chips to Microsoft’s Copilot productivity tool.
But with investors taking a closer look at the Magnificent Seven in a context of higher interest rates, shares have slowed their performance.
As CEO of Apollo Global Management Marc Rowan explained, “I’m not in the stock picking business. But very few people come in every day and try to buy 45 or 50 P/E stocks. It’s just not what we do.” (Disclosure: Apollo Global Management is the parent company of Yahoo Finance.)
“I look at the broader trend. We used to have 8,000 public companies. Now we have 4,000 public companies,” he added. “People think most of the action takes place in the public markets. 80% of companies with more than one hundred million [in] revenues and 80% of employment are in private companies.”
Some top traders shared their views on how to trade Magnificent Seven stocks in a new episode of Opening bid podcast. You can tune in below.
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Brian Sozzi is the executive editor of Yahoo Finance. He is also the host of “Opening bid“podcast. Follow Sozzi on Twitter/X @BrianSozzi and so on LinkedIn. Tips on business, mergers, activist situations or anything else? Email brian.sozzi@yahoofinance.com. Are you a CEO and want to participate in Yahoo Finance Live? Email Brian Sozzi.
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