Investing.com – Technology giants took center stage in equities last year, with growth stocks leading the way, ahead of value stocks. Sectors such as information technology and communications services in the index posted significant gains.
Much of the gains in US equities were driven by the rise of the Magnificent Seven (Apple (NASDAQ:), Microsoft (NASDAQ:), Alphabet (NASDAQ:), Amazon (NASDAQ:), NVIDIA (NASDAQ:) , Tesla (NASDAQ:) and Meta (NASDAQ:) Platforms), which sparked concerns about overvaluation.
Given the growth potential of current market leaders in long-lasting secular trends such as the application of AI across sectors, selective exposure to the Magnificent Seven may make sense based on their respective fundamental outlooks.
But history has taught us that diversification can effectively reduce the risks of excessive sector concentration. If we look at the S&P 500 index beyond the Magnificent Seven, the sales and profitability of the next $12 trillion of market capitalization are represented by 42 companies. These comprise a broad set of sectors ranging from technology and healthcare to financial and consumer companies.
Past results are no guarantee of future results. This information has been provided for informational purposes only and does not constitute an offer, a solicitation of an offer, or a recommendation to buy or sell any of the securities or instruments listed here. Data as of December 31, 2023. The following 42 companies represent non-Magnificent Seven stocks, ranked by market capitalization, with the stocks mentioned at the top of the list. Sales are the net sales (or revenue) of the relevant item reported in the last 12 months. Profits are operating profits for the last 12 months. Sources: Capital Group, LSEG
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