We are at the end of January 2024, and time is just speeding along. Looking at the Financial Heat map you will notice that January is normally a month of moderate returns. Tomorrow we will know the final tally for the rate of return for January. If you follow the Financial heat map you will notice that the probability of the markets having a positive return for the month is slim. That being said, pick your entry points wisely, and let’s take a look at some key factors to the Magnificent 7 Stocks.
These 7 stocks have such an impact on the world, our country, and the S&P 500 yet, for the most part, we do see them daily. The Magnificent 7 are known to have a 28% weight on the S&P 500 and in the last quart of 2023, their impact was over 50%.
What do we know about these companies? What are their defining direction and how have they changed?
MSFT{Microsoft Corporation, last trade $403.27 -5.32 (-1.30%)} the owner of XBOX, Bing, Activision Blizzard, Linkedin, Skype, Nokia, aQuantive, and Hololens. The once-monoculture company is creating an enormous footprint in virtual gaming and artificial Intelligence. Combining some of the resources of these companies could create synergies that will take the world into greater high-tech societies.
META{Meta Platforms, Inc., $393.55 -6.51 (-1.63%)}is one of the companies that no longer see themselves as a one-dimensional revenue stream. Facebook is no longer the sole revenue source generator. Facebook is now a company within the corporate structure of META. With companies such as Whatsapp, and Facebook Messenger, META could easily put an end to cell phone paid services. Over 90% of the countries, Kenya, Malaysia, South Africa, Nigeria, Argentina, and others use WhatsApp. 69% of people with internet and wifi use WhatsApp. Even though Instagram is still a big revenue source for the company since its purchase in 2012, META is banking on its ownership of Oculus’, another subsidiary, virtual headset, and projects with WhatsApp to bring an even greater chat experience.
TSLA{Tesla, Inc., $190.12 -1.47 (-0.77%)} made a smart strategic move in 2016 by reorganizing the company acquiring Solar City and making it a division of Tesla known as Tesla Energy. In addition, TSLA owns German Car developer and manufacturer Grohmann Engineering and Grohman parts division. Many people still view TSLA as an auto company but in fact, it is a data-driven tech company. Every Tesla automobile is linked to Tesla’s satellite company Starlink capturing data on driving habits, and building a detailed road map of every lane and driveway in the world. The data will then be processed to develop driverless cars. The strategic use of Solar City or Teslas Enery along with another subsidiary, Maxwell Technologies, is integrating resources to generate and store energy more efficiently.
GOOGL{Alphabet Inc., $141.77 -9.69 (-6.40%)} is no longer just a search engine company. The reason behind the name Alphabet Inc. is that they own every letter on the internet. It consists of YouTube, Chrome, Android, Fitbit, Nest, and a host of other companies. Linking your Fitbit and Nest together is already a thing! GOOGL has long been working on driverless car technology through its subsidiary Waymo which puts them in direct competition with TSLA and UBER.
AAPL{Apple Inc., $185.93 -2.11 (-1.12%)} is the biggest company in the world with its ownership of over 125 different companies. The Cupertino, Ca. company that holds its headquarters at Applepark, has yet to make its biggest acquisition. We know how the iPhone has taken this company into realms of dominance. Remaking the music industry with Apple Music, and the acquisition of Beats Music, the company continues to make moves in the broader entertainment industry. Do we see another acquisition of a larger entertainment company, like Disney?
AMZN{Amazon.com, Inc., $156.32 -2.68 (-1.69%)} is a hard company to determine the path which this massive company is headed. All we know is that when they enter a certain market they tend to destroy the competition with their approach of pursuit of industry dominance as a cheetah would a sickly gazelle. The main question that should be applied to the company is when will they get rid of the “.com” from their corporate name. Part of their list of subsidiaries includes MGM, the entertainment company, Audible, Alexa, Ring, Whole Foods, Amazon Robotics, and Zappos, an internet clothing retailer. Their company Twitch is an interactive video streaming service that is in the YouTube space but is a host to video and virtual gamers. Another subsidiary-owned company Zoox is an autonomous vehicle company.
NVDA{NVIDIA Corporation, $615.24 -12.49 (-1.99%)} is a chip maker that ties many of these companies together in the service that they provide; with chip making that requires more and more speed, Nvidia is the company that performs at a high demand. Even though their subsidiaries aren’t as known as the others of the Magnificent 7, they are still highly effective. Companies like Bright Computing, Cumulus Network, and Mellanox Technologies help the other companies by providing accelerated computational functions in handheld devices tablets, and supercomputers. Cloud computing is a vital expense to many of these companies like, Starlink satellites, Amazon Web Services, and YouTube’s video quality, speed, and storage, are all using Nvidia chips. Even Apple, who has had bad relations with Nvidia is using their services on a project with Disney subsidiary Pixar, Adobe, and Autodesk. Steve Jobs purchased the company from George Lucas in 1986 and called it, Pixar, which was sold to Disney in 2006 making him, then the largest Disney shareholder.
The value of these Magnificent 7 Stocks relies heavily on how they extract the intellectual capital from their subsidiaries. Even though this tech boom started 40 years ago, it is still very seldom that many of these companies have strayed from their dynamic goals. Some new products have taken them in an alternate course but they are still true to their core philosophy. For instance is Apple a phone maker or are they a developer of a computer that is now a handheld device? Has Alphapbert moved from a search engine or are they still using data to determine how we look to acquire information? Amazon Web Service is such a big company that it could be spun off into an even greater company. The key defining factor of all of these stocks is that they are dominant in technology and technology remains a big growth.