General Description

The Fab 7 have been a dominant force in global equity markets, consistently delivering exceptional performance. In Q4 2024, they posted aggregate earnings of $131.2 billion, a 31.7% year-over-year increase, significantly outpacing the S&P 500s 16.9% growth. Their aggregate revenue reached $509 billion, marking a 12.8% year-over-year increase, more than double the S&P 500s 5.2% revenue growth. Nvidia, Amazon, and Meta were the primary drivers, with Nvidia leading in earnings growth for six consecutive quarters. The Index that tracks these seven companies recorded an impressive quarter to date, gaining over 20%, and is currently trading near its all-time highs. Valuations have moderated from recent peaks, with the P/E ratio at 42x in Q1 2024. The group now trades at a P/E ratio of 34.39x, compared to the S&P 500s 24.27x. Their future earnings growth prospects are driven by innovation, particularly in AI, and their dominant market positions, which justify their premium valuation. Institutional investor preference remains high, with all seven stocks in the top quartile of the Smart Holdings model. Over 5 years, the basket gave an annualized return of 35.5% against S&P 500 returns of 13.5%.