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We have seen some awe-inspiring results from Microsoft MSFT, Meta Platforms META, and Amazon AMZN in recent days that reconfirm their leadership position in this market.

These companies, along with their peers in the ‘Magnificent 7’ group of stocks – Apple AAPL, Alphabet GOOGL, Tesla TSLA, and Nvidia NVDA – led the market higher last year, and that momentum has continued this year.

Other than Tesla, whose results disappointed the market once again and reflected the fourth quarter in a row of disappointing results, all of the other Mag 7 members that have reported came out with impressive growth numbers. The market wasn’t particularly impressed with the Alphabet and Apple reports, but they came out with Q4 earnings growth of +51.8% and +13.1%, respectively.

Tesla’s earnings were down -45.8% in Q3 on +3.5% higher revenues, as the EV-maker continued to grapple with weakening margins in an increasingly competitive EV market.

The chart below shows the one-year performance of the Magnificent 7 stocks relative to the S&P 500 index and Tesla.

Image Source: Zacks Investment Research

The chart below shows the January 2024 performance of this group.

Image Source: Zacks Investment Research

Using estimates for Nvidia, which will be coming out with its December-quarter results on February 21^st, and actual results for the other six members of the group, total Q4 earnings for the group are expected to be up +48.7% from the same period last year on +14.5% higher revenues.

The chart below shows the group’s Q4 earnings and revenue growth performance in the context of what we saw from the group in the preceding quarter and what is currently expected for the next three quarters.

Image Source: Zacks Investment Research

The chart below shows the group’s earnings and revenue growth picture on an annual basis.

Image Source: Zacks Investment Research

Please note that the Mag 7 companies currently account for 28.6% of the S&P 500 index’s total market capitalization and are expected to bring in 19.5% of the index’s total earnings in 2024. For 2023 Q4, the Mag 7 group has a bigger weightage, bringing in 23.1% of all S&P 500 earnings.

The chart below shows the group’s earnings contribution to the index over time and what is currently expected for the next two years.

Image Source: Zacks Investment Research

Given their enormous earnings power and growth profiles, it is hard to argue with the group’s market leadership. Importantly, analysts had been raising their estimates for the group even before the December-quarter results, with these numbers now adding to the positive revision momentum.