The Magnificent Seven stocks have not been so magnificent as of late. The Roundhill Magnificent Seven ETF (NYSEMKT:MAGS), which invests exclusively in those seven mega-caps dubbed magnificent, has underperformed the S&P 500 this year.
The exchange-traded fund, which invests in just seven stocks — Nvidia (NASDAQ:NVDA), Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), Amazon (NASDAQ:AMZN), Meta Platforms (NASDAQ:META), Alphabet (NASDAQ:GOOG), and Tesla (NASDAQ:TSLA) — is up just 2.8% year to date (YTD) and 4% over the past 12 months.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a “Double Down” signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same “Total Conviction” signal is flashing for a company 1/100th the size of Nvidia. Continue »
On one end of the spectrum, Apple stock has outperformed, up 28% YTD and 29% over the past year. Amazon and Microsoft have been solid, if not spectacular, with Amazon up 17% YTD and 8% over the past year and Microsoft up 10% YTD and 5% over the past 12 months. Meta (-3%), Alphabet (-9%), Nvidia (-10%), and Tesla (-16%) are all down YTD.
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Another mega-cap, Berkshire Hathaway (NYSE:BRKB), is the 13th-largest company in the world. Its stock price is up 16% YTD and 18% over the past 12 months. Is Berkshire Hathaway stock the better buy right now?
A bump in the road
Of course, while the Magnificent Seven stocks have struggled this year, they have been juggernauts over the past 10 years, leading the AI revolution. Their long-term returns reflect that, as the chart below shows.
Nvidia, for example, has averaged a 58% annualized return over the past 10 years, while Apple has averaged a 29% return. Only Meta has averaged less than a 20% return over the past decade, with an average annualized 10-year return of 18%.
The recent swoon by most of the Magnificent Seven stocks is due to a variety of factors, most of them specific to the individual companies. If there are overriding trends hurting most of these mega-caps, it is their generally high valuations and concerns about overspending on AI.
Some of the Magnificent Seven stocks are great buys right now, trading at significant discounts. Some of them are not great buys. But the perfect complement to any Magnificent Seven holdings you might have is Berkshire Hathaway.
Berkshire: The perfect complement
Over the past 60 years, since Warren Buffett became CEO of a small textile manufacturing company back in 1965, Berkshire Hathaway stock has posted an average annual return of 20%.
