Goldman Sachs recently reported a significant shift in the performance of the top technology companies, known as the “Magnificent 7,” after analyzing their first-quarter results. The collective profits of Apple Inc, Amazon.com Inc, Alphabet Inc, Meta Platforms Inc, Microsoft Corporation, NVIDIA Corporation, and Tesla Inc increased by 48% year-over-year. This growth was driven by a 14% increase in sales and a margin expansion of 521 basis points, resulting in an aggregate margin of 22.8%. However, beneath these impressive numbers lie varying fortunes for the individual companies.
Within the “Magnificent 7,” Meta Platforms, Alphabet, and Amazon emerged as outperformers, exceeding expectations with sales growth of 27%, 15%, and 13% respectively. Consequently, their year-to-date share prices rose by 34%, 25%, and 21% respectively, showcasing a stronger market performance compared to their peers. On the other hand, Apple witnessed a 4% decline in sales, while Tesla experienced a significant 9% drop in revenues. As a result, Apple's shares declined by 1% and Tesla's plummeted by a staggering 30%, leading to Tesla's ranking dropping to the 12th largest stock in the S&P 500 index.
Goldman Sachs analysts noted that the wide dispersion in performance highlights the diverse challenges and opportunities faced by these industry leaders. While some companies continue to expand and surpass market expectations, others are grappling with tougher economic conditions. The disparities in performance underscore the complex landscape of the tech industry, where success and struggle can coexist within the same cohort of companies.
In light of the first-quarter results, Goldman Sachs suggested that the moniker “Magnificent 7” may need to be retired, indicating a shift in the dynamics of these top technology companies. The report emphasized that the industry is evolving rapidly, with each company facing unique hurdles and opportunities. The upcoming results from NVIDIA will provide further insights into the ever-changing landscape of the tech sector, adding another piece to the puzzle of the industry's current standing.