Source: Finance Association
① In the past 12 months up to this Friday, only Tesla's stock price has fallen so far among the “Big Seven” stocks; ② Many Wall Street people currently say that the recent sharp decline in Tesla shares seems to have begun to threaten its position in the “Big 7” group.
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Tesla, whose market capitalization has long been higher than Meta since 2022, has now been left far behind by the social media giant — as Meta shares closed up 20.32% this Friday, hitting a record high of $474.99, its market capitalization increase of about $1970 billion in a single day also set a new record in US stock history. In contrast, Tesla has plummeted all the way this year, and the cumulative decline has reached about 24%.
Currently, Meta's market capitalization has reached $1.21 trillion, which is more than double that of SLA ($57.7 million)!
And when we expand our scope of observation to the US tech “Magnificent Seven” (Magnificent Seven), which Wall Street relished over the past year, Tesla's weakness seems even more obvious: in the past 12 months up to this Friday, only Tesla's stock price has fallen so far — a cumulative decline of about 4% since closing on February 6 last year.
The so-called “Big Seven” of US stocks mentioned above — Apple, Microsoft, Amazon, Google's parent companies Alphabet, Meta, Nvidia, and Tesla, performed an unusually rapid round of gains last year and “did a great job” in driving US stocks to record highs.
As the stock prices of giants such as Meta and Nvidia continued to rise strongly during the year, the share of this group of tech giants in the S&P 500 index has now reached 28.6%, up from 27.8% at the end of 2023. According to LSEG data, this is close to the highest weight share ever for this combination.
However, many Wall Street people now say that the recent sharp decline in Tesla stock seems to have begun to threaten its position in this giant group.
Wall Street debate: Should Tesla be “fired” from the Big Seven?
Brandon Michael, senior investment analyst at ABC Funds, said that the current pattern of US stocks seems more like the “Magnificent 6” (Magnificent 6).
He pointed out, “Tesla is facing many problems, including competition from Chinese electric vehicle manufacturers, price cuts, and shrinking profit margins. Even Musk himself has confessed that the Dojo supercomputer is an unattainable goal.”
From a fundamental perspective, high borrowing costs, weakening demand due to reduced government subsidies, and major price cuts across regions are all challenges this electric vehicle pioneer is dealing with. At the earnings conference held earlier this month, Tesla CEO Musk personally warned that although profit margins have been cut to attract consumers, sales growth may slow down this year. This has raised investors' concerns about weak demand for Tesla cars and that the company is facing more intense competition.
On the technical side, with the cumulative drop in stock prices of nearly 24% this year, Tesla's daily level also formed a “dead cross” pattern this Thursday — the 50-day moving average fell below the 200-day moving average.
Some tech traders have interpreted the appearance of this sign as a possible sign that Tesla will face more losses in the future.
In fact, the “nicknames” of US tech giants have not always been set in stone.
Before the term “Big Seven” became popular, investors also put forward the FANG statement, which initially referred to — Facebook, Amazon, Netflix, and Google, then became FAANG, which included Apple. Meanwhile, during the internet boom in the late 1990s, investors once poured into the so-called “Four Horsemen” — Cisco, Intel, Dell, and Microsoft. Today, none of the top three are comparable in size to Microsoft!
I can't help but wonder if Tesla will take the lead in “expelling” the Big Seven in the future?
Who else can “replace” Tesla in US tech stocks?
Of course, if people still plan to keep the “Big Seven” title in the future, it seems that they can plan ahead now: What other US tech giants can replace Tesla?
Many institutional investors say that the next giant to “take over” Tesla is likely to be a company that will successfully monetize the booming momentum of AI.
Some people think that the US communications chip giant Broadcom seems to be a good choice — judging from the market capitalization rankings, Broadcom currently ranks second only to Tesla in the global corporate market capitalization list, and the market capitalization gap between the two is only about 25 billion US dollars.
Michael of ABC Funds believes that Broadcom will be the main competitor. The company's market capitalization has doubled last year, while traders are betting that the company's recent acquisition of VMware will provide a further boost. “If I had to pick another Big Seven company, it would be Broadcom, a leader in custom chips that is driving the artificial intelligence revolution,” Michael said.
In addition to Broadcom, another market darling is AMD — a major competitor to Nvidia that produces chips for all the graphics processor units needed for artificial intelligence, which more than tripled its market value last year.
Chris Beauchamp, chief market analyst at IG Group, said that although AMD's market value is dwarfed by Tesla, it may still stand out because it is another major beneficiary of the current AI revolution.
However, if none of the other “replace Tesla” options mentioned above can be reached in the industry, and Tesla's stock price continues to “go all the way south” after that, then for Wall Street, the easiest approach is probably to directly reduce the “Big Seven” to the “Big Six.”
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Editor/jayden