Magnificent Seven                     

One of the Magnificent Seven corporations. Photo Yahoo

By Isaac Cohen*

Motivated by the expectation that the central bank of the United States, known as the Federal Reserve, will lower interest rates sometime this year, the stock market after several weeks of hesitation reached a new record. Last January 18, the S&P 500 index increased 1.2 percent, to 4,389, an increase of 35 percent above the previous peak reached two years before, in January 2022.

Besides the positive signals of a soft landing, indicating lower inflation without a recession, the upward push came basically from a group of seven high technology companies involved in the advancement of artificial intelligence. Baptized by Bank of America analyst Michael Hartnett, using the title of a 60s cowboy movie, the “Magnificent Seven” are: Alphabet (Google), Amazon, Apple, Meta (Facebook), Microsoft, Nvidia, and Tesla. Together, these seven companies contributed almost two thirds to this year’s 23 percent increase in the S&P 500 index. By the end of February, Microsoft reached a market capitalization of $3.125 trillion, the best valued publicly owned company, displacing Apple to second place with $2.7 trillion.

But the stellar performer among the seven is Nvidia, originally a producer of chips used in computer graphics for videogames, it has become the main supplier of the chips required by artificial intelligence operations. With an increase in market value during the last 12 months of almost 300 percent, Nvidia has moved to third place with a market capitalization of $2.2 trillion. Jeff Sommer in The New York Times (03/17/24) called Nvidia “the wonder of the year.”

*International analyst and consultant, former Director ECLAC Washington. Commentator on economic and financial issues for CNN en Español TV and radio, UNIVISION, TELEMUNDO, and other media.

 

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