Consolidation is ubiquitous in today's global financial markets. When a company achieves a monopoly in a specific market segment, its growth momentum will be significantly enhanced and it may annex potentially threatening start-ups. These companies often have the ability to scale their products efficiently, further consolidating their market positions. Apple (AAPL), Microsoft (MSFT), Alphabet (GOOGL), Meta Platforms (META), Amazon (AMZN), Nvidia (NVDA) and Tesla (TSLA) are prime examples.
Market dominance of the Big Seven
Bank of America analyst Michael Hartnett dubbed the companies the “Big Seven” in April 2023. At the time, the stocks delivered 88% of the market’s return to shareholders. While Tesla’s lead has waned, the Big Seven as a whole has outperformed the market. The Roundhill Magnificent Seven ETF (MAGS) has returned 35.8% year to date, while the S&P 500 (SPX) has returned just 15.1% over the same period.