The Magnificent Seven stocks — Apple (AAPL), Microsoft (MSFT), Alphabet (GOOG, GOOGL), Amazon (AMZN), Meta (META), Tesla (TSLA), and Nvidia (NVDA) — dominated the tech landscape in 2023, and Constellation Research Founder and Principal Analyst R "Ray" Wang believes they could "definitely" continue leading into 2024 after driving two-thirds of the S&P 500's (^GSPC) gains.

Wang attributes their outperformance to AI, digital networks, and unmatched revenue growth. These core strengths with wide enterprise adoption position them to maintain index sway. Beyond the Magnificent Seven, Wang highlighted other names like Oracle (ORCL) and ServiceNow (NOW) also poised to "benefit from the AI boom."

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Video Transcript

DIANE KING HALL: And what a year it has been for tech stocks. The so-called Magnificent Seven, that's Amazon, Apple, Alphabet, NVIDIA, Meta, Microsoft, and Tesla have dominated the S&P 500 this year, as investors scooped up shares of mega-cap tech names. Can these stocks continue to dominate in 2024?

For a deeper dive into the tech sector, we're joined by Ray Wang, Constellation Research principal founder and analyst. Ray, it's always great to talk to you. I love your commentary, whether you're with us or on social media on the artist formerly known as Twitter. Always great insight. So let's start out with the kind of broad headline. Can they continue to dominate in 2024?

RAY WANG: Definitely. And happy Friday. Look, 0.1 trillion market cap from the doldrums of 8 trillion at the beginning of the year. The S&P was up 25% and 2/3 of the gains were in these seven stocks. Now these seven stocks also drove 39.5%. They were up 3.5% in revenues when the rest of the 493 stocks were down 2.3%.

What's driving this? It's AI. It's the digital networks. It's their ability to continue to drive revenue growth in the double digits. And, of course, the 10-year yield is starting to come down is also driving the factor. So the winners here are really the companies that are able to actually continue. But there's also stocks outside the Magnificent Seven that are also going to do well.

Companies like Oracle. Companies like Salesforce, NVIDIA, ServiceNow that are going to benefit, not just from the AI boom, but also from the fundamentals of what digital giants have.

RACHELLE AKUFFO: So, you know, I have to ask you about your MATANA stock. So people who aren't familiar with the acronym, it's Microsoft, Apple, Tesla, Alphabet, NVIDIA, and Amazon. Given the push that AI is making and really changing some of the landscape here, any changes to that acronym? Anyone perhaps who should be added or taken out of that list?

RAY WANG: They definitely should stay and we saw the Mag Seven got the x from, which was Meta. And the reason Meta and Facebook is so important is because they're playing a crucial role in large language models with Llama.

They've got some of the best language models, and they're being seen as kind of the Switzerland for where AI is going to play in terms of how people design, build those models, and actually look at model marketplaces. That's actually why Meta is in that mix. And so that's why we've gone from MATANA to Mag Seven. And I think that's the big shift.

In addition, NVIDIA still got a great run. And I think a lot of folks don't realize there's still a shortage of GPUs, and that's playing a big role in terms of why NVIDIA stock is targeted at about 550 in terms of where they'll be next year. And then the one that people haven't really been paying attention to really is Tesla. Tesla's got a lot of interesting AI technologies sitting in the background, and you'll start to see that come into play as Elon expands his AI ambitions going forward into 2024.