Magnificent 7 shines again

There's a lot of criticism in the analyst community that the US market is too focused on the Magnificent 7 stocks. Currently, 34.1% of the market cap of the S&P 500 is made up by Apple, Microsoft, Amazon, Google, Meta, Nvidia and Tesla. The argument is that this concentration is unhealthy, a sign of a bubble and the result of passive index trackers that don't rebalance their holdings adequately.

I don't buy it. I believe these companies are so influential because they are of the highest quality, they make the most money and they have fantastic prospects. To support my argument take a look at this statistic from FactSet.

In the first quarter of 2025, the Magnificent 7 stocks posted year over year earnings growth of 27.7%, that is 3 times higher than the combined growth of the remaining 497 companies in the index. The proof is always in the earnings.