More Gains From AI, Experts Say


Key Takeaways

  • The “Magnificent 7” refers to a group of high-performing U.S. stocks including Microsoft, Amazon, Meta, Apple, Google parent Alphabet, Nvidia, and Tesla.
  • Several of the Magnificent 7 saw substantial gains in 2023 fueled by artificial intelligence (AI) advancements.
  • Experts say they anticipate continued growth for Microsoft, Amazon, Google, Meta, and Nvidia, driven by ongoing and future AI projects.

The “Magnificent 7” stocks had an exciting 2023, significantly outperforming the major U.S. indexes as several got a boost from developments related to artificial intelligence (AI), but experts suggest many of these market leaders’ AI journey has just begun, with more innovation in the AI space expected in 2024.

Magnificent 7 Helped Fuel Stock Market Gains in 2023

Coined by Bank of America analyst Michael Hartnett in 2023, the “Magnificent 7” refers to a group of high-performing U.S. stocks including Microsoft (MSFT), Amazon (AMZN), Meta (META), Apple (AAPL), Google parent Alphabet (GOOGL), Nvidia (NVDA), and Tesla (TSLA).

After a dismal 2022 for U.S. equities with the S&P 500 posting its worst performance since the Great Recession, the stock market staged a remarkable recovery in 2023 with the index up over 24% heading into the last trading week of the year, driven by gains made by the Magnificent 7. Since the start of 2023, Nvidia shares have more than tripled in value, while Meta and Tesla more than doubled. In the same period, Amazon gained 80%, while Apple, Alphabet, and Microsoft rose nearly 60%.

The other 493 stocks of the S&P 500, or the “Meager 493″ as Mike Dickson, head of research at Horizon Investments, calls them, collectively gained just 7.5% by early December, according to the firm’s research. The tech giants’ overperformance compared to their peers within the index was also largely “fueled by the potential of artificial intelligence,” Dickson noted.


What to Expect in 2024

Experts anticipate the Magnificent 7 could be poised to see more gains in the new year thanks to the AI boom.

“An unusual feature of generative AI is that, right from the onset of the new technology, many of the same companies are already operating in multiple stages of the value chain—from cloud to the ownership of large language models (LLMs), to the development of end-user applications,” UBS analysts said in a research note.

The Magnificent 7 has “the significant resources needed to build and benefit from complex AI models” and UBS “expect[s] the large players to grow larger still.”


Shares of tech giant Microsoft, which gained nearly 60% this year, hit multiple record highs in 2023, in part due to interest surrounding AI.

While Microsoft does offer its own AI tools and hardware, its partnership with ChatGPT maker OpenAI drove significant investor interest as well. Through its “multiyear, multibillion-dollar investment to accelerate AI breakthroughs,” Microsoft has firmly established itself as a leader in the AI race. 

The company’s AI advancements and announcements are also unlikely to slow down in 2024, according to analysts, especially with the support of its OpenAI partnership. 

Microsoft is “essentially the torch bearer of the global AI Revolution,” Wedbush analysts said, adding that the firm “believe[s] the stock has yet to price in what we view as the next wave of cloud and AI growth coming” to Microsoft in 2024. OpenAI’s “ChatGPT will be the next leg of the growth stool for MSFT” and “will ultimately spur growth and margins into” the 2024 fiscal year.


Shares of Google parent Alphabet have climbed almost 60% in 2023 amid enthusiasm for the company’s AI-related advancements, which included the launch of Bard, a chatbot, and Gemini, a large language model (LLM)

Bard was unveiled in February, and though its launch was less than impressive when the chatbot made a factual error during the first public demonstration, Bard has undergone several updates since then that helped make the tool a viable alternative to ChatGPT. In early December, Google introduced Gemini, its own LLM AI model, which reportedly outperformed OpenAI’s GPT-4 model. 

Google “may still be a step behind MSFT/OpenAI,” but “AI advancements are moving incredibly fast,” CFRA analyst Angelo Zion said, adding that the firm “think[s] future Gemini upgrades will allow GOOGL to keep up with the competition and be a major AI beneficiary.”

Google said it will launch Gemini Ultra, the “largest and most capable model for highly complex tasks, after further fine-tuning” which will power Bard Advanced in in 2024. J.P. Morgan analysts called Google a “new top pick” as Gemini tightens the GenAI gap. 

“AI is more of a 2024 story,” CFRA analysts said, noting that the firm “like[s] initiatives related to Bard, Gemini, and Search Generative Experience” when examining Google’s outlook in the new year.


Amazon shares gained more than 80% in 2023, as the e-commerce giant advanced in the AI space.

Amazon notably began offering Bedrock through Amazon Web Services (AWS), the company’s cloud computing platform. Bedrock is “a fully managed service that makes leading foundation models from AI companies available through an API along with developer tooling to help build and scale generative AI applications,” Amazon said. Amazon also introduced Q, a GenAI assistant available through AWS, and its next-generation custom-designed AWS chips, optimized for GenAI, in November.

Similar to Microsoft, Amazon bolstered its AI standing through a multi-billion dollar investment into a company already finding success in the tech. Amazon said the company would invest up to $4 billion in AI firm Anthropic, in a move that could allow the company to better compete with Microsoft-backed ChatGPT and Google’s Bard. 

When asked about reports that Amazon is working on a large language model (LLM) called Olympus, Adam Selipsky, the CEO of AWS, told AP that they should “expect to see multiple iterations of Amazon’s first-party models.” Selipsky also noted that he believes that “very rapid evolution and change” is coming in 2024 as the tech evolves and businesses optimize its integration.

J.P. Morgan analysts anticipate that “growing GenAI contribution” could support AWS growth in the new year. Beyond AI projects, Amazon is expected to have a positive 2024 with J.P. Morgan analysts naming it the firm’s “top large-cap pick” for the internet sector.  JPM analysts projected revenue growth in the new year driven by a reacceleration in Amazon’s retail and AWS sectors and expanding margins.


Even among the Magnficent 7, Nvidia stands out as a major benefactor of the AI boom in 2023, with the largest share movement compared to others. On multiple occasions during the year, Nvidia shares saw double-digit growth in a single day. On May 25, after the company reported a “surging demand” for its products and a first-quarter earnings beat, share surged more than 24% from the previous day’s close.

As companies scramble to build AI models and integrate AI tools, Nvidia chips are used to power much of the technology, with Bank of America analysts writing that the chipmaker’s dominance in AI training likely represents more than 90% of the market share.

Nvidia announced its most powerful graphics processing unit (GPU), H200, designed to power AI models in November. The new chip is set to be used by Amazon, Google, and Microsoft, among other systems. 

Amid some concerns about the impact of U.S. restrictions on AI chip exports to China on Nvidia’s bottom line, analysts have been steadfast that the chipmaker’s gains in the AI boom will drive profitability. Nvidia could be the “best positioned” compared to competitors like Intel (INTC) and Advanced Micro Devices Inc. (AMD) according to Jefferies analysts, who named Nvidia the firm’s “franchise pick.”

Despite other chipmakers like AMD and Intel making progress towards claiming a slice of the pie, Nvidia “should still end up a winner (if not the winner),” Wedbush analysts said.


Meta shares nearly tripled in 2023 as the Facebook parent company joined the AI push. 

The company introduced LLaMA, a LLM, in February. Since then Meta has used its AI tech to improve algorithms and advertising systems. 

“AI is a foundational component of Meta’s apps and services, enhancing performance, measurement, and campaign setup,” the company said in a release. CEO Mark Zuckerberg reported that AI recommendation tools have driven an increase in the time that users spend on Meta platforms. 

Meta’s “efforts in AI thus far have been to improve its recommendations/rankings that power its entire ecosystem,” but “over time, META can monetize AI via its Llama 2, AI agents, and metaverse,” CFRA analysts said. The firm is “more optimistic about META’s initiatives toward a content-driven discovery platform.”


Tesla shares nearly doubled in 2023, and while the electric vehicle pioneer didn’t introduce many major AI projects, the company is no stranger to the tech, as Tesla’s autonomous driving cars rely on AI technology.

CEO Elon Musk has also been vocal about his view that AI is “the most disruptive force in history,”  even saying “there will come a point where no job is needed… the AI will be able to do everything.”

Musk launched xAI, an AI-focused company, in July. While x.AI is its own separate company, it “will work closely” with X (formerly Twitter) and Tesla. The company introduced Grok, an AI chatbot, in November, though the product is not yet widely available.  

It could be a challenging new year for Tesla, with Bernstein analysts going as far as to say that shorting Tesla could be the “best idea” for 2024. The firm said it anticipates that the electric vehicle (EV) pioneer could “disappoint” investors in the new year due to low demand “stem[ming] from Tesla’s narrow (and expensive) product family which is reaching saturation, and continued competition in the EV space,” the analysts said.


Apple may not have released its own AI chatbot yet like some other members of the Magnificent 7, but the tech giant confirmed that it is working with AI tech, and its shares have gained nearly 50% in 2023. 

CEO Tim Cook said Apple “[will] continue weaving it in our products on a very thoughtful basis” in a May earnings call. Apple is also reportedly working on a chatbot that could be released at a later date.

Despite Apple’s more muted involvement in the AI race, analysts say that the tech giant is poised for a profitable 2024, especially with the iPhone 15 propping up its holiday sales. The coming fiscal year is “the golden opportunity” for Apple investors, according to Wedbush analysts, who said that as “roughly 240 million iPhones in the window of an upgrade opportunity globally now at play for iPhone 15 and Services,” which the firm estimated is “worth $1.5 trillion to $1.6 trillion on a standalone basis” is “re-accelerating” into 2024.

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