S&P 500: Investors Load Up On 3 Stocks Beyond The ‘Magnificent Seven’

If it seems like everyone and their brother owns the “Magnificent Seven” S&P 500 stocks, you’re right. But most investors are also loading up on some less obvious stocks.

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Three stocks, including Advanced Micro Devices (AMD), Berkshire Hathaway (BRKB) and SoFi Technologies (SOFI), round out the 10 most commonly held stocks across all generations, says an Investor’s Business Daily analysis of just-released June 30 data from Apex Fintech Solutions, S&P Global Market Intelligence and MarketSmith.

These popular holdings with all investors, no matter if they’re baby boomers or millennials, highlight where most suspect the big stock gains will come from after the tech-stock rally peters out.

“Megacap weakness and valuations have the sector on a short leash for a downgrade,” said Rob Anderson, U.S. Sector Strategist at Ned Davis Research.

Life Beyond The Magnificent Seven In The S&P 500

It’s easy to see why investors are piling into the same seven S&P 500 stocks. It’s working — this tiny group of stocks is driving most of the S&P 500’s gains this year. But for how long?

The Magnificent Seven stocks, Tesla (TSLA), Apple (AAPL), Amazon.com (AMZN), Nvidia (NVDA), Microsoft (MSFT) and Alphabet (GOOGL), are up an average 87% just this year. That far outpaces the S&P 500’s 16.3% rise. And it tops the 37% gain of the Invesco QQQ Trust (QQQ).

But some of these stellar stocks are showing strain. Take Apple, the second-most popular stock held by investors following Tesla, says Apex.

Apple stock is up nearly 37% this year despite souring fundamentals. In its just-reported second-quarter results, Apple showed a year-over-year drop in revenue for the third-straight quarter. Additionally, shares of Apple dropped below their average price in the past 50 days for the first time since January, says Bespoke Investment Group. Falling below this trading level usually sets the stock up for weakness, Bespoke says.

Looks like many investors are hedging their bets.

AMD: A Top S&P 500 Pick Outside The Magnificent Seven

Following the Magnificent Seven, computer chipmaker AMD is investors’ most popular holding. It’s no slouch either. Shares are up 66% just this year.

And just like at Apple, AMD’s quarterly profit has been falling. The company on Aug. 1 reported a quarterly profit of 58 cents a share in the June quarter. That topped views. But it was down 44% from the same year-ago period. Profit fell in the March and December quarters, too.

But investors are looking for growth from AMD. The company’s profit is seen rising 1.4% in the September quarter and 29% in the December quarter.

Rounding Out Investors’ Top 10 Stocks

Following AMD, investors also hold giant positions in financials like Warren Buffett’s Berkshire Hathaway and SoFi.

Berkshire Hathaway, ironically is a big bet on the Magnificent Seven. Its largest public holding is Apple. Berkshire Hathaway, though, at least adds a bevy of companies from other industries like insurance and railroads. Analysts think Berkshire Hathaway’s profit will rise more than 27% this year. That sure beats the anemic 0.8% profit growth analysts see coming from the S&P 500 this year, says FactSet. Shares of Berkshire Hathaway are up just  16% this year.

Another top 10 holding with investors, SoFi, is surprising on multiple fronts. For one, it’s up nearly 88% this year. That means the bank is outperforming the average Magnificent Seven stock. Additionally, it’s not an obvious big stock to own as it’s not in the S&P 500. The company, worth just $8 billion, is also on pace to lose money in 2023.

But with SoFi, and most of these popular stocks, investors are positioning for what’s next. SoFi is expected to turn a profit on an adjusted basis in 2025.

And for investors, that sounds magnificent.

Most Popular Stocks With Investors

Sources: Apex, S&P Global Market Intelligence, IBD. Portfolio ranks as of June 30, 2023. Market gains as of Aug. 11, 2023

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