Magnificent 7, Magnificent No More
The Magnificent 7 have massively outperformed the S&P 500 over the past five years, in some cases returning several times as much as the index. The real question now is whether that era of dominance is coming to an end.
Over the last five years, the S&P 500 has returned approximately 80%, including dividends. During that same period, the Magnificent 7 stocks have returned nearly 250% — roughly three times more than the broader market. The group became “magnificent” for a reason: the returns have indeed been magnificent.
However, is that likely to continue?
What the Data Shows
We extracted data from finviz.com on forward P/E ratios and expected earnings growth over the next year for each stock, and compared these numbers with those for the S&P 500.
Data for the S&P 500 were obtained from State Street Global Advisors, the sponsor of the SPY ETF. The numbers are shown below:
| Forward PE | EPS Next Year | Forward PEG Ratio | |
| NVDA | 18,75 | 37,00% | 0,51 |
| GOOG | 26,20 | 14,70% | 1,78 |
| AAPL | 31,45 | 9,90% | 3,18 |
| MSFT | 21,70 | 15,80% | 1,37 |
| AMZN | 26,40 | 14,60% | 1,81 |
| TSLA | 170,00 | 28,60% | 5,94 |
| META | 17,35 | 6,40% | 2,71 |
| S&P500 | 22,70 | 17,20% | 1,32 |
Reading the Numbers
According to finviz.com — and verified by other sources — NVDA currently trades at a forward P/E ratio of 18.75, while next year’s earnings are expected to grow by 37%. That combination results in a forward PEG ratio, our favorite valuation statistic, of 0.51.
For context, the comparable numbers for the S&P 500 are a forward P/E ratio of 22.70 and expected earnings growth of 17.2%, resulting in a forward PEG ratio of 1.32. Generally speaking, the lower the PEG ratio, the cheaper the instrument relative to its expected growth.
The Valuation Problem
All other Magnificent 7 stocks currently trade at forward PEG ratios higher than the S&P 500’s. NVDA is the only stock in the group trading materially below the broader market on that basis. In fact, the discrepancy is so large that it raises the possibility that market participants may not fully trust current analyst estimates.
Still, let’s stick to the data we have and avoid unnecessary speculation.
What Comes Next
The data suggest that the Magnificent 7 group is unlikely to outperform the S&P 500 by a significant margin over the next year. If meaningful outperformance does occur, it will most likely be driven primarily by NVDA.
At present, several stocks in the group appear expensive relative to the broader market — particularly AAPL, TSLA, and META — while others such as MSFT, GOOG, and AMZN appear closer to fairly valued.
Based on current forward PEG ratios, NVDA remains the only clear value opportunity within the group.