Microsoft Should Be Thrown Out Of Magnificent 7

Key Points:

• The Magnificent 7, comprising Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla, represent the world’s largest megacap companies with a combined market cap exceeding $20 trillion, roughly equal to China’s GDP.
• Despite their dominance, the group has underperformed the broader S&P 500 this year, rising only 5% compared to the S&P 500’s 9%, with Microsoft down 13% due to losing its early lead in the AI revolution.
• Microsoft’s partnership with OpenAI, a key part of its AI strategy, has unraveled as OpenAI formed major collaborations with Microsoft’s rivals, resulting in Microsoft’s license to OpenAI’s technology becoming non-exclusive and casting doubt on its AI future.
• Meanwhile, Nvidia has emerged as the leader in AI chips, Amazon and Google have integrated AI into their cloud and product ecosystems, Meta has boosted ad revenue with AI, Apple leverages Google’s AI through Gemini without heavy investment, and Tesla continues to focus on AI and robotics despite lagging stock performance.
• Given Microsoft’s diminishing AI presence in both consumer and enterprise markets, analysts suggest the Magnificent 7 may soon become the Magnificent 6, excluding Microsoft as no other tech company currently matches their AI capabilities and market valuation.