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For a long time, the “Magnificent Seven” dominated Wall Street. However, uncertainty triggered by US tariff policies has caused their share prices to drop sharply. “Thanks to their technological edge, the Mag 7 are likely to continue sparking investor imagination,” says Thorsten Fischer, Managing Director and Head of Portfolio Management at Moventum AM. Within the group, however, differences are becoming more pronounced. “That’s also because the Mag 7 are increasingly competing against one another,” Fischer adds.

The exceptional performance of the Mag 7 – Amazon, Apple, Microsoft, Nvidia, Tesla, along with Google’s parent company Alphabet and Facebook’s parent Meta – has significantly shaped US equity markets over the past two years. While the S&P 500 rose by a quarter in 2023, the Mag 7 almost doubled their share prices. In 2024, they gained another 64%, compared to just 23% for the S&P 500. Their soaring valuations have dramatically inflated their market capitalisation: by the end of 2024, it reached $17.6 trillion, accounting for more than a third of the overall market. Apple alone was worth more than twice the combined value of all 40 companies in the DAX index.

Four key drivers lay behind the Mag 7 boom. First, their technological leadership, pricing power, and global brand presence created a “moat” against competitors. Second, consistently high profits and above-average quarterly results bolstered investor confidence. Third, their heavy weighting in indices such as the S&P 500 attracted passive capital. Fourth, amid a fragile macroeconomic backdrop, these US giants were perceived as relatively safe investments.

But the election of US President Donald Trump has reshuffled the deck. His announcement of extreme tariffs has heightened overall uncertainty. This has particularly affected the Mag 7, whose valuations were already elevated. Is the rally now over? “In the short term, US economic exceptionalism will not vanish,” explains Fischer. “Nor will the Mag 7 lose their leadership overnight.”

Nevertheless, US trade policy is weighing on the entire US market. Investors are seeking alternatives, particularly in Europe, where governments are stimulating their economies through additional debt. Added to this are concerns about a weakening dollar. “And ultimately, market shares may shift – not all seven companies may still belong to the Mag 7 five to ten years from now,” Fischer notes. The tech giants are increasingly encroaching on each other’s turf, sparking internal competition.

One example of mutual dependencies: as of March 2025, 40% of Nvidia’s revenues came from business with Microsoft, Meta, Amazon, and Alphabet. “This interconnection could have a cascading effect if demand weakens,” says Fischer. In the field of autonomous driving, cannibalisation within the Mag 7 could emerge. Tesla, the industry leader, is not alone here – Alphabet’s subsidiary Waymo is also active, although it has faced several setbacks, as has Apple, which has significantly scaled back its car project. Amazon, on the other hand, acquired Zoox in 2020, developed autonomous electric vehicles, and uses robotics and AI in its logistics and delivery operations. Nvidia doesn’t produce its own cars but is a key supplier of AI chips and platforms for autonomous driving, such as Nvidia Drive. Microsoft is indirectly involved in the electric vehicle business through its Azure Cloud, investing in partners like GM’s Cruise and offering AI/cloud solutions, though it has no vehicle project of its own.

The Mag 7 are also competing in the search engine market. Market leader Google/Alphabet remains far ahead. Microsoft follows in second place with Bing, the second-largest search engine in the Western world, now closely integrated with ChatGPT/Bing Chat. Apple does not yet have its own search engine, but according to reports, is developing one. Apple services like Spotlight and Siri Search currently rely on web searches, usually via Google. Meanwhile, Amazon’s product search is already one of the most-used search tools for consumer goods. “Overall, the still solid but weakening growth in Google’s revenues in recent quarters suggests increasing competition,” Fischer observes.

Fierce competition also exists in the cloud sector. Market leader Amazon Web Services is being pursued by Microsoft, whose Azure is the second-largest provider, offering a comprehensive range of cloud services and AI integrations. Alphabet’s Google Cloud Platform (GCP) ranks third. Nvidia, though it doesn’t operate its own cloud, provides hardware for many cloud providers and runs its own AI platforms such as Nvidia DGX Cloud.

“This potential infighting among the Mag 7 companies already carries considerable negative surprise potential, but additional trouble could come from the political front,” Fischer notes. In addition to potential antitrust lawsuits, a new source of risk appears to be sitting in the Oval Office: Donald Trump’s recent announcement to impose a 25% tariff on all iPhones sold in the US but not manufactured there has immediately triggered significant share price losses. “This shows that not even the world’s most valuable companies – whether US-based or not – are safe from becoming targets of Trump’s policies,” says Fischer.

Conclusion: The Mag 7 remain technology leaders and a central pillar of global stock markets. But their era of undisputed dominance may be coming to an end. Not all Mag 7 companies are likely to maintain their weight, particularly if product diversification stagnates. Trump’s protectionist tendencies could also directly affect the firms themselves and redirect capital flows to other regions of the world. “Political risks, valuation concerns, and internal competition call for a selective approach,” advises Fischer. Investors should increasingly focus on differentiation – both within the Mag 7 and when considering alternative markets.