Top Tech Investor Declares the Magic of Magnificent Seven as Inactive

Top Tech Investor Declares the Magic of Magnificent Seven as Inactive

The Fall of the Tech Titans?

For years, investors have banked on the Magnificent Seven for astronomical returns. Yet, one of its wealthiest beneficiaries recently pronounced this lucrative strategy as good as dead.

Once a group of massive tech stocks, the Magnificent Seven tripled their total weight in the S&P 500 over the last decade. They now account for approximately one-third of the index. In 2024, these powerhouses surged an astonishing 63%, contributing more than half of the entire index's returns.

But now, the undisputed reign of the Magnificent Seven appears to be waning. Notable investor Stephen Yiu, a standard-bearer for the revolutionizing stocks that have fueled his fund's triumphs, declared their dominance now extinct.

"Don't get me wrong, they won't vanish... but for them to surpass markets like in the past decade, I believe we've probably reached the end of that era," Yiu said in an interview with City AM.*

Since the beginning of 2025, the Magnificent Seven's performance lags behind, with the Roundhill Magnificent Seven ETF—a fund that equally weights all the stocks—plummeting more than 14% this year.*

Yiu forecasted that without the Magnificent Seven to bolster stock market growth, returns for investors would plummet "a lot lower" in the coming years.*

"Suppose the market was offering more than 10%. I think, moving forward, maybe that number could be five percent." Yiu added, speculating figures for emphasis.

Besides the Magnificent Seven's faltering performance, Yiu postulates that the increased interest rates since the coronavirus pandemic have been the silent killer of tech's high-growth business model since 2022.*

"Unprofitable growth, which is about gaining market share, spending lavishly, lavishing freebies or rides to anyone—I think that's over for good until interest rates return to pre-pandemic levels, which, at the moment, doesn't seem imminent," added Yiu.*

Yiu, the manager of the £1.1bn Blue Whale Growth fund, previously held stakes in Microsoft and Meta, but sold out of both this year and only clings to Nvidia.

He first invested in Nvidia in 2021, when the company's market cap was a humble $500bn—it's now an impressive $2.8 trillion.*

Yiu remains bullish on "the magnificent one" due to the staggering demand for its chips in AI infrastructure development and its high spending on research and development.*

While the Magnificent Seven stocks have faced some turbulence due to U.S. President Donald Trump's tariffs and Chinese rival DeepSeek, these companies have been on a steady decline since the beginning of the year.*

Despite a broader investor exodus from U.S. stocks, Yiu only retains one UK-listed company in his portfolio (London Stock Exchange Group).

Yiu explained that with a "high conviction portfolio," the manager focuses on unique companies. Few substitutes can be found for some of the U.S. giants.*

"We have both Visa and Mastercard," he offered as an example, adding, "You don't have a competing alternative outside of America that I can easily buy."

Visa's stock price has risen 11.2% since the beginning of 2025, while Mastercard has climbed 7.7%, compared to a 4% decline in the S&P 500.*

However, Yiu is still keeping an eye out for opportunities outside the U.S., such as Italian defense firm Leonardo, which has seen its stock price soar over 70% since the beginning of 2025.*

"Trump's policies have created an opening for European defense companies," Yiu said. But he identified only a few sectors outside the U.S. that appeal to him.*

The most current addition to the Blue Whale portfolio is US private credit giant Apollo, which has found its place in the fund's top ten holdings for the first time.*

As the private credit market has flourished amid a pullback by banks, Apollo sits atop a mountain of 'dry powder' (or committed capital) ready to be deployed.*

As a money manager, Apollo lends out investors' funds rather than its own assets, allowing it to reap fees without assuming the excessive risk that has plagued some banks from loans.*

While the magnitude of challenges the Magnificent Seven faces remains unclear, understanding potential risks can help investors make informed decisions and capitalize on new opportunities.

The Magnificent Seven includes Alphabet (GOOG), Amazon (AMZN), Apple (AAPL), Meta Platforms (META), Microsoft (MSFT), Nvidia (NVDA), and Tesla (TSLA)*[2][3].

Potential Challenges

• Economic Uncertainty
  • Trade Policies and Tariffs
  • Inflation and Rising Interest Rates
• Regulatory Challenges
  • Antitrust Actions
  • Data Privacy Concerns
• Technological Disruption and Competition
  • Innovation and Emerging Competitors
  • AI and Cloud Services Competition
• Market Sentiment and Valuation
  • Shifting Investor Perception
  • High Valuation Concerns

Impact on Investment Returns

Potential decline or volatility in Magnificent Seven stocks could:

• Impose Losses: If these stocks slide significantly, investors with large portfolios concentrated on these companies may face hefty losses.
• Reshape Market Leadership: A decline could signal a shift in market leadership, affecting overall tech sector performance and influencing broader market indices.[2]
• Incur Opportunity Costs: Overzealous focus on these tech titans may lead investors to overlook opportunities in other sectors or smaller, promising tech companies.[1]

"In the upcoming years, the anticipated decrease in returns for investors, as predicted by Stephen Yiu, might be due to the decline of the Magnificent Seven's dominance in the market, given that their performance has been lagging since the beginning of 2025."

"Yiu, the manager of the Blue Whale Growth fund, has started investing in alternative sectors, such as US private credit giant Apollo, to diversify his portfolio and capitalize on new opportunities that may arise from the possible decline of the tech-heavy Magnificent Seven."

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