Secrets behind 'Magnificent 7' surge ahead of Nvidia earnings

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Brian Sozzi · Executive Editor

Mon, May 12, 2025, 8:45 AM

The Magnificent 7 stocks are performing strongly again, even with chipmaker Nvidia's earnings report not due until May 28. This leadership group, which had largely underperformed in 2025 due to valuation concerns and macroeconomic risks, has seen a rally since the April 8 lows. This resurgence can be attributed to a couple of key factors. First, tech mega-caps like Microsoft (MSFT) and Alphabet (GOOGL (GOOGL)) significantly exceeded earnings estimates. Barclays' data indicates that these large-cap tech companies beat analyst earnings estimates by an average of 8% in the first quarter. Second, the earnings growth for these major tech players in the first quarter was once again impressive. Goldman Sachs' (GS) data reveals that large-cap tech stocks within the Mag 7 achieved an average earnings growth of 28% in the first quarter, compared to just 9% for the other 493 stocks in the S&P 500.

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Let's get a minute on the shot clock. I want to dive into our stocks of the day, that is seven stocks, and you guessed it, that is the mag 7 because these stocks are absolutely ripping higher once again. Locking in on the round hill mag 7 ETF, up 18% from the April 8 flow. Now, first blush you think these stocks are doing well because of this new China trade news and, yeah, that might be part of the reason, but there are other two other reasons for this. First up, the earnings, earnings estimates for these companies were absolutely demolished over the past few weeks, pretty much across the board, Google, Microsoft, you name it. A good stat by the folks over at Barclays, the average large cap tech stock beat first quarter earnings estimates by 8%, that's pretty darn good. Number two reason is that earnings growth for large cap tech players was very strong in the first quarter yet again. Not that it hasn't been strong, it just people didn't think it was going to be strong, was strong again. Goldman Sachs data shows large cap tech stocks in the mag 7 delivered 28% average earnings growth in the fourth quarter. The 493 other stocks in the S&P 500 only 9%. So, 28%, 9%, the market likes the 28% better, as you would expect. That's it for our stocks of the day.