One of the more amusing aspects of the stock market these days is all the attention being paid to the Magnificent Seven tech companies and their eight stocks.

The term was coined as a throwaway line in a May 2023 report by Michael Hartnett, chief investment strategist of BofA Securities. Hartnett, you see, is a fan of The Magnificent Seven, the classic 1960 gunslinging Western starring Yul Brynner and Steve McQueen. The term just took off.

In 2023, all Seven were, in fact, magnificent. Each had a starring role in the market. But so far this year, Nvidia

NVDA

1.75%

is the Magnificent One, and the rest range from mediocre to terrible. But the term Magnificent Seven is still being used. Roundhill Investments has even issued an exchange-traded fund, Roundhill Magnificent Seven (ticker: MAGS), linked to the group.

Let me take you through the numbers to explain why in terms of market reality, the term Magnificent Seven is obsolete and should probably be retired.

Last year, the most magnificent of the Seven, Nvidia, had a total return of 239%, while the other six— Amazon.com, Alphabet (formerly Google), Apple

AAPL

-0.82%

, Microsoft, Meta Platforms (formerly Facebook), and Tesla

TSLA

-2.44%

—each returned between 49% and 194%.

Because the S&P 500

SPX

-0.04%

is based on companies’ stock market values (unlike the Dow Jones Industrial Average

DJIA

-0.15%

, which is based on companies’ stock prices), you can see from the table below that Nvidia’s influence on the S&P 500 ranks behind that of Microsoft and Apple even though it had a far better performance than either of them.

Last year’s amazing performances meant that the Seven accounted for 62.2% of the S&P 500’s 26.3% return, according to Howard Silverblatt, the senior index analyst at S&P Dow Jones Indices, whose numbers I’m using throughout this column.

Subtract the Seven, Silverbatt says, and last year the Less-Than-Magnificent 493 would have returned 9.94%.

But this year, with Tesla tanking—it was down 28.3% through May 31, compared with last year’s rise of 101.7%—the term Mag Seven no longer seems to make any sense. At least, not to me.

However, the term lives on—as many things tend to do on Wall Street, even when they’re past their sell-by date.

On the surface, even with Tesla tanking, the Seven are still reasonably magnificent if you look at the big picture rather than parsing the detailed 2024 numbers that you can find above.

According to Silverblatt, the Seven accounted for 53.2% of the S&P’s total return of 11.30% through May 31, so they’re still punching above their weight. Subtract the Seven, and the S&P return would be just 6.01%, he says.

However, if you look closely at the numbers, you will see something very strange.

To wit, Nvidia’s contribution of 32.26% of the S&P 500’s total return through May 31 exceeds the 21.01% total contribution of what we can call the Other Six. Even if we ignore the loss to the S&P from Tesla, which we shouldn’t, Nvidia’s contribution still exceeds the 25.64% total of the six companies whose stocks posted positive returns.

Nvidia’s dominance is simply stunning. Its contribution to the S&P 500’s return is 4.6 times that of Microsoft, the second biggest contributor. And except for Nvidia and Microsoft, the other five each returned less than the collective 6.01% that the Non-Magnificent 493 returned.

Apple has so far had a tremendous June. Will that streak continue? Who knows.

I don’t expect any of what I’m showing you here to make any difference in how often the Magnificent Seven name is used in talking and writing about the market. But I think you ought to see what’s really going on, as opposed to just tossing around the name BofA’s Hartnett created in passing and that took on a life of its own.

There have been endless articles and analyses of Nvidia’s performance and prospects for its stock, and there’s no point in going over familiar ground. Besides, I know I don’t know where Nvidia will go from here—though I sure wish I did.

What I do know, though, is that in the movie, The Magnificent Seven, the seven hired gunmen hired by a Mexican village suffer serious casualties but save the villagers from having to turn over food and supplies the bad guys were after.

Will the Magnificent Seven stocks be as helpful to investors as their movie namesakes were to the villagers? There’s no way to tell. But it’ll sure be interesting to watch. Just don’t take the name seriously.

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