No 1 in the ‘magnificent 7’

A catchy nickname for a group of stocks does wonders for an analyst’s presentation, but divergent fortunes mean it often struggles to keep its relevance over time.

The “magnificent seven” may have been the theme of 2023, but a week of tech earnings reports suggest that some are looking distinctly more magnificent than others. Apple and Alphabet underwhelmed the market, but Meta led the charge with the biggest jump yet in a company’s market capitalisation, adding a cool $197bn in a single day.

Meta’s sales and outlook exceeded market expectations, and it even went so thoroughly old school as to pay a dividend after a year in which Mark Zuckerberg dedicated himself to efficiency, which appears to involve going through the headcount like the grim reaper.

He hasn’t completely abandoned his attempt to make something of the metaverse, a concept that seems to appeal to approximately one person on the planet, but far more noise is now being made about the introduction of generative AI to the platform, with a warning to investors to expect hefty bills to develop cuttingedge products.

Fourth-quarter revenues came in at $40bn, a 25% jump on the previous year, as advertising revenue bounced back aided by the use of generative AI to boost the effectiveness of ads. Chinese advertisers were particularly strong, with China-based advertisers now accounting for 10% of Meta’s annual revenue as the likes of Temu and Shein hurl cash around to gain a foothold in the US. They’ll be doing well to compete with Amazon, which also reported a fourth quarter of considerable magnificence.