Combined profits from the ‘Magnificent 7’ big tech companies including Apple, Amazon and Meta are now bigger than all listed companies in almost every G20 country

New research shows that the combined profits of America’s top tech companies last year exceeded the sum of the profits of companies listed in almost every other G20 country.

Deutsche Bank analysis found that the profits of Apple, Amazon, Alphabet, Meta, Microsoft, Nvidia and Tesla largely dwarf the wealth of foreign companies in the group, which itself accounts for 75 percent of global trade.

Only China and Japan achieved greater returns than the ‘Magnificent Seven’ when all their gains are added together. Yet Deutsche showed that the market capitalization of Mag 7 would make it the second largest country stock exchange in the world – with Japan in fourth place.

According to asset manager Evelyn Partners, the ‘Magnificent Seven’ returned an average of 107 percent in 2023, quickly outgrowing the MSCI USA index of other large and mid-market segments – which returned just 27 percent last year.

It’s a welcome relief for the big tech sector, which struggled through the pandemic as customers turned away from advertising before inflationary pressures triggered record job losses in the sector.

Analysis shows that the market capitalization of just Microsoft and Apple individually is comparable to the combined ceilings of all listed companies in France, Saudi Arabia and the United Kingdom.

Microsoft has been in the top five since 1997, except for a four-month interregnum, and Apple since 2009, CNBC reported.

But the group also includes newcomers such as Nvidia, which rose to the top in the first half of last year.

Now a global leader in artificial intelligence, Nvidia’s rise reflects advances in AI technology and the demand for innovative new tools in modern business.

Since the turn of the year, the company’s shares have grown by as much as 47 percent.

Elsewhere, OpenAI – behind ChatGPT – reached an $80 billion valuation following a Thrive Capital deal backed by Microsoft.

And US-backed semiconductor manufacturer GlobalFoundries with a $1.5 billion subsidy to produce the technology domestically.

Part of these companies’ rapid rise is attributed to interest rate cuts after months of policies aimed at curbing inflation through 2022.

Yet analysts warn of risks to the American success story. Jim Reid, head of global economics and thematic research at Deutsche Bank, said the US stock market “rivals with 2000 and 1929 for being the most concentrated in history.”

Travis Oglesby, senior wealth advisor at Avidian Wealth Solutions, wrote on LinkedIn: “On the one hand, we should be proud of American innovation. On the other hand, I find it a bit frightening how powerful and large these few companies have become.”

While some have had surprising successes, it is notable that Elon Musk’s Tesla has fallen from one of the five most valuable companies in 2021/2022 to tenth in just over a year.

Forbes reported By early 2024, Tesla had seen profits fall 23 percent after “a series of price cuts on its cars.”

The company’s gross margin fell 17.6 percent in the fourth quarter of last year, to the lowest level since 2019.

‘At the edges, the Mag 7 has seen some volatility around the position of its members, and you can question their overall valuations, but the core of the group has for years been made up of the largest and most successful companies in the US and therefore the world . now,” Reid added.

Shifts in the market have seen the dominance of ‘FAANG’ – Facebook (parent group Meta), Apple, Amazon, Netflix and Google (parent group Alphabet) – displaced by the Magnificent Seven, resulting in Netflix being replaced by Nvidia.

“MnM? Microsoft, Nvidia & *now* Meta Leading in AI Era,” Raymond James analyst Josh Beck said in a note to clients earlier this year.

Earlier this month, it was reported that Microsoft had overtaken Apple as the world’s largest company, with a share value of $405.

Nvidia was up 44 percent to $693, and Meta, formerly Facebook, was up 33 percent to $459.

Bret Kenwell of eToro said: ‘It’s been a fantastic journey for the so-called “MnM” trio: Microsoft, Nvidia and Meta.

“Meta and Nvidia are up about 30 percent and 40 percent so far this year and up about 145 percent and 220 percent respectively over the past year.

“Microsoft has been no slouch either, up nearly 60 percent in the past 12 months.”

Tesla has faced a number of challenges in recent years but remains one of the top 10 US technology companies

Only G20 China and Japan offered higher returns than those of the top US tech companies.

The group also includes Argentina, Australia, Brazil, Canada, France, Germany, India, Indonesia, Italy, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey and the United Kingdom

Deutsche recently too noted that India became the fastest growing major economy in the world while holding the G20 presidency until 2023.

In August, the country became the fourth country to land on the moon with its Chandrayaan-3 spacecraft.

About 60 percent of India’s population of 1.3 billion live with less than $3.10 per day, the World Bank’s average poverty line.