The global stock market is staging a strong comeback, edging closer to reclaiming its all-time highs following a volatile April. A key driver of this recovery? The Magnificent 7 – a group of heavyweight tech stocks that have contributed significantly to the recent surge in market capitalisation.
Tech titans fuel market recovery
After dipping into bear territory earlier this year, major indices are bouncing back, powered primarily by big tech companies. The so-called Magnificent 7 stocks have accounted for nearly 55% of the S&P 500’s market cap recovery since early April.
“Big tech remains very important players for market participants,” said Jordan Portelli, Chief Investment Officer at Calamatta Cuschieri Moneybase. “Given their weight within major indices, business profiles, innovation through heavy investments also within the AI space, and their expected linear growth in their major offerings, such companies are hard to ignore.”
Magnificent 7 add $4 trillion to S&P 500 recovery
From the 7th April onward, the S&P 500 saw a $7.5 trillion rebound in total market capitalisation. Remarkably, nearly $4 trillion of that came from the Magnificent 7 alone.
“This means the Magnificent 7 has contributed c.9.1 percentage points to the 16.8% return of the S&P 500 during this period,” explained Mr. Portelli.
Among the standout performers:
Tesla: +45.35%
Nvidia: +42.33%
Earnings, not just sentiment, behind the rally
While easing trade tensions and backtracking on tariffs from the U.S. administration have helped sentiment, strong corporate earnings have played a crucial role as well.
During Q1, the Magnificent 7 companies reported earnings growth of 27.7%, easily outpacing the 16% consensus forecast.
Navigating volatility with long-term vision
The rally didn’t come without turbulence. Market volatility remains elevated, driven by both geopolitical uncertainty and investor overreaction. Despite such uncertainties, our investment team acted with caution, patience, and perspective.
“Throughout this period of high volatility, we zoomed out to look at the bigger picture,” said Mr. Portelli. “What was happening both in terms of the imposed tariffs and how the market reacted did not make absolute sense. The imposed tariffs have no sense on a long-term economic basis, and as an investment team we got to the conclusion that Trump had to eventually soften notably his stance. This is why we opted to entirely ride the volatility and stay put, while at the same time taking opportunities in companies which got very enticing from a valuation point of view.”
A new era of market behavior?
In our view, short-term volatility is becoming a structural feature of modern markets.
“Market participants tend to overreact, and this is a new phenomenon we have been witnessing since the pandemic,” he said. “Intra-day volatility has become the new norm and thus we have to accept that the market is passing through structural changes which we indeed have to adapt to.”
Once again, Mr. Portelli remarked that the long-term fundamentals haven’t changed.
“The fundamentals that markets have been functioning on for many years remain intact as a core basis, and this is where despite short-term volatility triggers fear, over the long-term, good companies will emerge key contributors towards performance.”
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This information document is issued by Calamatta Cuschieri Investment Services Ltd (“CCIS”). CCIS is licensed to provide investment services under the Investment Services Act in Malta by the Malta Financial Services Authority. The registered address of CCIS is Ewropa Business Centre, Triq Dun Karm, Birkirkara, BKR9034, Malta.
This information is provided solely for educational and informational purposes and should not be construed as investment advice, advice on specific investments or investment decisions, tax advice, legal advice, or any other form of professional or regulatory advice. The information does not take into account your personal circumstances and is provided to you on the express understanding that it does not constitute advice and should not be relied upon in making any investment decision. Investing in financial instruments involves risk. Any performance figures quoted refer to the past and past performance is not a guarantee nor a reliable guide to future performance. You should conduct your own research before making any investment decisions and seek the assistance of a licensed financial advisor if you are unsure. No person should act on any opinion or information contained in this document without first obtaining appropriate professional advice. CCIS does not accept liability for any actions, proceedings, costs, demands, expenses, damages, or losses suffered as a result of reliance on the information, views, or opinions expressed in this document.
