Today, the investment spotlight seems to be on the Magnificent 7. There are seven US technology companies. Alphabet (Google), Amazon, Apple, Meta (Facebook), Microsoft, Nvidia (semiconductors and AI) and Tesla.
They are impressive. At the beginning of 2025, those seven stocks were all in the top 10 largest stocks in the US. They have grown and shareholders have been rewarded.
From an investment perspective, how long will their winning streak last? That is a difficult question to answer. But history offers some insight into past top-performing companies.
In the 1980s, the 10 biggest companies did not maintain their high rankings. By 2000, only three companies maintained their top-10 status, and five years later, all firms were off the top-10 list.
Today’s world is filled with firms involved in developing AI or using AI to power innovation and growth. The question is whether we know which companies will continue to flourish or falter. Which new companies will suddenly appear as new leaders?
Based on many decades of history and knowing how competitive business is, plus the accelerated speed of innovation, I predict that at some point these stars of today will fade, and new stars will appear.
I would avoid concentrating too much of your portfolio in today’s top stocks.
Peter Watson, of Watson Investments MBA, CFP®, R.F.P., CIM®, FCSI offers a weekly financial planning column, Dollars & Sense. He can be contacted through www.watsoninvestments.com.
