[News Terms] 3Q Earnings Season Kicks Off... Spotlight on the 'Magnificent 7'

This week (23rd-27th), as companies listed on the New York Stock Exchange announce their third-quarter earnings, the most closely watched report by investors is from the big tech companies belonging to the ‘magnificent 7.’

[Image source=Yonhap News]

The magnificent 7 is a coined term referring to seven big tech companies driving the U.S. information technology (IT) industry: ▲Apple ▲Microsoft ▲Alphabet (Google) ▲Amazon ▲NVIDIA ▲Tesla ▲Meta (Facebook). The term is derived from the English title of the 1960s Western film "The Magnificent Seven," symbolizing how these seven companies equipped with generative artificial intelligence (AI) are charging forward relentlessly, creating a scenario reminiscent of the Wild West era. The term was first used by Michael Hartnett, Chief Investment Strategist at Bank of America (BofA), and has since become widely adopted. With AI emerging as the biggest topic this year, the leading stocks on the New York Stock Exchange have shifted from the traditional FAANG (Facebook, Amazon, Apple, Netflix, Google) to the magnificent 7.

Among the magnificent 7, the most spotlighted company is NVIDIA, which surpassed a $1 trillion market capitalization this year and led the rally in U.S. tech stocks. Founded in 1993 as a specialist in high-performance graphics processing units (GPUs), NVIDIA is considered the biggest beneficiary following OpenAI’s release of the generative AI ‘ChatGPT.’ This is because GPUs, devices that quickly process graphics and video on PCs and output results to monitors, are essential components for generative AI, which requires fast computation and repetitive learning. NVIDIA supplies more than 90% of the world’s GPU volume. NVIDIA’s stock price, which was $143.15 on January 3, soared to $502.66 in August, fueled by the generative AI boom. Recently, however, the stock has been adjusting after the U.S. Department of Commerce announced it would expand semiconductor export controls from cutting-edge AI semiconductors to lower-spec AI semiconductors to curb China’s semiconductor ambitions. Following the announcement on the 17th, NVIDIA’s stock price fell more than 10% by the 20th.

Meanwhile, as the stock prices of companies in the magnificent 7, centered on NVIDIA, surged and their share within the Nasdaq grew, Nasdaq made a special adjustment to its flagship index, the ‘Nasdaq 100,’ for the first time ever on July 24. The adjustment reduced the weights of six companies?Apple, Microsoft, Alphabet, Amazon, NVIDIA, and Tesla?excluding Meta, which has the smallest market cap among the magnificent 7, and increased the weights of the remaining companies.

This content was produced with the assistance of AI translation services.