Much has been made this year about the performance of the Magnificent Seven (Microsoft, Apple, NVidia, Alphabet, Meta, Amazon & Tesla). The euphoria over artificial intelligence has especially favored NVidia, which is currently putting in record highs.
NVidia’s darling status reminds me of a couple years ago when Tesla was the darling.
Note the below chart, which superimposes NVidia’s 2023 performance over Tesla’s run since 2021. Two years ago, Tesla was breaking records. Today it’s still considered one of the Magnificent Seven, but it’s down over 42% from its record high. Earlier this year, it was down by nearly 74%.
My point is that darling stocks can and often do suffer drastic price decreases. Keep that in mind as NVidia, Microsoft & Apple look invincible.
If you haven’t’ seen it yet, here’s a 60 second video that describes how the Magnificent Seven aren’t so magnificent and how that relates to the current stock market rally: