Is it a bubble? Magnificent 7 market cap equals the GDP of 11 major cities


So, just how big are the Magnificent Seven tech companies?

At $12.5 trillion — and likely a whole lot more after Friday — the combined market cap of Microsoft
MSFT,
+1.56%,
Apple
AAPL,
+1.33%,
Alphabet
GOOGL,
+0.76%,
Amazon.com
AMZN,
+2.63%,
Nvidia
NVDA,
+2.44%
and Tesla
TSLA,
+0.84%
is equal to the combined GDP of New, York, Tokyo, London, Los Angeles, Paris, Seoul, Chicago, San Francisco, Osaka, Dallas and Shanghai, according to Bank of America calculations.

Related: Meta just joined Nvidia and Microsoft in elite subset of the ‘Magnificent Seven’

It’s of course worth adding the caveat that market cap and GDP really aren’t meant to be directly compared, and so much of San Francisco’s output is directly tied to the tech heavyweights that reside in and near the Bay Area.

Bank of America strategists led by Michael Hartnett say that the Magnificent 7 accounted for 45% of the S&P 500’s
SPX
return in January, and an even starker 71% excluding Tesla, which has struggled this year.

Harnett and team said the bond yields down/Nasdaq up action in the fourth quarter has flipped to Nasdaq up/yields up for the first four weeks of 2024. They say that price action occurs either post-recession or in bubbles.

They say an optimal strategy is a barbell of bubble stocks and very distressed assets, i.e. China or small caps.



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