All the Magnificent Seven S&P 500 stocks look impressive this year. But it's a totally different story if you widen your view just a little.
Three of the Magnificent Seven stocks, including Tesla, Amazon.com and Alphabet are actually down over the past two years, says an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith. That's a big disappointment if you consider the broader S&P 500 has erased its nearly 20% drop in 2022. It's only down 0.8% in the past two years and up 0.6% if you include dividends.
"The Magnificent Seven become the Magnificent Three and Devastating Three as we finally recover 2022's loss," said Howard Silverblatt, senior index analyst at S&P Dow Jones Indices. One of the Magnificent Seven, Meta Platforms, is flat in the past two years so it's neither magnificent nor devastating in the past two years.
Uneven Two-Year Run For S&P 500 Magnificent Seven
There's no question all the Magnificent Seven stocks are having a great year. As a group, Microsoft, Apple, Nvidia, Amazon.com, Meta Platforms, Tesla and Alphabet contributed more than two-thirds of the S&P 500's return this year, Silverblatt says.
Just Microsoft and Apple, combined, accounted for more than 28% of the index's return. Such huge gains are a big reason why the S&P 500 is back to even since the end of 2021 on a total return basis (including dividends). "Not great, but at least it's back in the black," Silverblatt said. This year has been a steady grind higher lately. There hasn't been a 1% daily move for the S&P 500 since Nov. 19, when it jumped 1.9%.
But it's interesting to note many of the "magnificent" stocks this year are still in the hole in the past two years.
'Devastating' Three S&P 500 Stocks
Tesla is the biggest disappointment in the past two years. Shares of the electric vehicle maker are still down nearly 30% since the end of 2021. Seeing the stock skid is definitely out of character. It's up more 100% this year and more than 2,200% from the end of 2013, making it a top S&P 500 stock in those time periods.
Tesla's 65% drop in 2022 is tough to recover from. Investors that year priced in what's looking like a 22% fall in adjusted earnings per share in 2023. But that dip in profit seems to be behind the company. Analysts now expect adjusted profit per share to rise 25% and 36% in 2024 and 2025, respectively.
Amazon.com is another disappointing stock from two years ago. Shares of the online retailer are still down 12.6% from the end of 2021 despite a 73% rally this year so far. Again, losing about half its value in 2022 is a tough hit to recover from. The company lost 27 cents a share in 2022. But it's back on track. Analysts think it will earn $2.68 a share this year and $3.46 a share in 2024.
Lastly, Google parent Alphabet is yet to recover from its 39% loss in 2022. Even following a 47% rally this year, shares of the online search giant are down 10.4% in the past two years. Analysts are bullish on the company's profit, calling for 26% growth in 2023 and 16% in 2024.
Certainly, no one who invested in the Magnificent Seven stocks in 2023 will complain. But those who piled in during 2022 might have a different opinion.
Not Looking So Magnificent Since 2022
| Company | Symbol | YTD %. ch. | 2-year % ch. |
|---|---|---|---|
| Tesla | 100.7% | -29.8% | |
| Amazon.com | 73.4 | -12.6 | |
| Alphabet | 47.0 | -10.4 | |
| Meta Platforms | 174.1 | -1.9 | |
| Microsoft | 51.9 | 8.3 | |
| Apple | 51.2 | 10.6 | |
| Nvidia | 224.8 | 61.4 | |
| SPDR S&P 500 ETF | 23.2 | -0.8 |
