The performance of the Magnificent Seven

Investors around the world have been closely eyeing the performance of the so-called Magnificent Seven companies, including tech giants like Alphabet (Google), Amazon, Apple, Meta (Facebook), Microsoft, and NVIDIA. These companies have been driving market returns in 2023 and are often used as a reference point for many investors. Debra Slabber, Director and Portfolio Specialist at Morningstar South Africa, warns that while these companies have solid competitive advantages and are at the forefront of the artificial intelligence hype, it's essential for investors to tread carefully and not get caught up in the hype. Slabber highlights the risks associated with investing in these companies, including valuation concerns, regulatory risks, and the dangers of blindly allocating to passive funds. She emphasizes the importance of ensuring that the price paid for these companies is fair and justified to avoid potential losses or being caught in a bubble. Despite the allure of the Magnificent Seven, Slabber cautions investors to assess the risks and make informed decisions when considering these tech giants for their portfolios.