In case you’re wondering, this ‘Magnificent Seven’ has nothing to do with the 2016 movie with the same title.
‘Magnificent Seven’ is a term coined by analysts from the Bank of America Corporation (NYSE:BAC), and it refers to a collection of 7 companies listed in the US market, namely:
- Alphabet Inc.
- Amazon.com Inc.
- Apple Inc.
- Meta Platforms Inc.
- Microsoft Corporation
- NVIDIA Corporation
- Tesla Inc.
For the benefit of those who may not be too familiar with the above 7 companies, in today’s post, you’ll find a brief information of the company’s business, as well as a highlight of its financial results for the year so far:
1. Alphabet Inc. (NASDAQ:GOOG, NASDAQ:GOOGL)
The differences between NASDAQ:GOOG and NASDAQ:GOOGL is that the former has no voting rights (meaning shareholders are unable to cast their votes on matters such as mergers and acquisitions), and because of that, it trades at a slight discount to the latter. However, in terms of ownership stakes in the company, both are the same.
The tech giant is behind the Google suite of services, including its Google search engine, Gmail, Google Drive, Google Maps, Google Photos, Google Play, and YouTube. The Chrome internet browser, as well as the Android platform (for mobile devices) is also by the company. This is on top of hardware products such as the new Pixel 7 and Pixel 7 Pro, and the very first Pixel Watch, together with Fitbit wearable devices, and Google Nest home products.
Alphabet Inc. generates income primarily through advertising (that appears on Google Search and other properties, YouTube, and Google Network partners’ properties), Google Play (from sales of apps and in-app purchases), hardware (from sales of Fitbit wearable products, Google Nest home products, and Pixel devices), YouTube non-advertising (where subscription revenues are generated from services such as YouTube Premium and YouTube TV).
The company have a financial year end every 31 December. Hence, for the first 9 months of FY2023 (ended 30 September 2023), its key financial results compared to the same time period last year is as follows:
| 9M FY2022 | 9M FY2023 | % Variance | |
| Total Revenue (US$’mil) | $206,788m | $221,084m | +6.9% |
| Net Profit (US$’mil) | $46,348m | $53,108m | +14.6% |
| Gross Profit Margin (%) | 56.1% | 56.7% | +0.6pp |
| Net Profit Margin (%) | 22.4% | 24.0% | +1.6pp |
| Net Cash/ Debt (US$’mil) | +$7,331m | +$16,921m | > +100% |
Sundar Pichai, CEO of Alphabet Inc., said, “I’m pleased with our financial results and our product momentum this quarter, with AIdriven innovations across Search, YouTube, Cloud, our Pixel devices and more. We’re continuing to focus on making AI more helpful for everyone; there’s exciting progress and lots more to come.”
2. Amazon.com Inc. (NASDAQ:AMZN)
Amazon.com Inc. is recognised by many for its namesake online shopping website – and it is one of the ways which the technology generates its revenue from, through sales of products and related shipping fees.
This is on top of revenue generated from the manufacturing and selling of electronic devices, including Kindle, Fire table, Fire TV, Echo, Ring, Blink, and eero, as well as through subscription services such as AWS (Amazon Web Services – a subsidiary of Amazon that provides on-demand cloud computing platforms and APIs to individuals, companies, and governments, on a metered, ‘pay-as-you-go’ basis), and Amazon Prime, a membership program that includes fast, free shipping on millions of items, access to award-winning movies, and other benefits.
The following table highlights the financial performance of Amazon.com Inc. for the first 9 months of FY2023 (ended 30 September 2023) compared to the same time period last year (the company has a financial year end every 31 December):
| 9M FY2022 | 9M FY2023 | % Variance | |
| Total Revenue (US$’mil) | $364,779m | $404,824m | +11.0% |
| Net Profit (US$’mil) | -$3,000m | $19,801m | N.M. |
| Gross Profit Margin (%) | 44.3% | 47.6% | +3.3pp |
| Net Profit Margin (%) | – | 4.9% | N.M. |
| Net Cash/ Debt (US$’mil) | -$23,741m | -$11,017m | N.M. |
The company was in a net loss position last year due to a pre-tax valuation loss included in non-operating expense for its common stock investment in Rivian Automotive Inc.
Andy Jassy, Amazon.com Inc.’s CEO, said, “We had a strong third quarter as our cost to serve and speed of delivery in our Stores business took another step forward, our AWS growth continued to stabilize, our Advertising revenue grew robustly, and overall operating income and free cash flow rose significantly.
The benefits of moving from a single national fulfillment network in the U.S. to eight distinct regions are exceeding our optimistic expectations, and perhaps most importantly, putting us on pace to deliver the fastest delivery speeds for Prime customers in our 29-year history.
The AWS team continues to innovate and deliver at a rapid clip, particularly in generative AI, where the combination of our custom AI chips, Amazon Bedrock being the easiest and most flexible way to build and deploy generative AI applications, and our coding companion (CodeWhisperer) allowing enterprises to have the equivalent of an experienced engineer who understands all of their proprietary code is driving momentum with customers, including adidas, Booking.com, GoDaddy, LexisNexis, Merck, Royal Philips, and United Airlines, all of whom are starting to run generative AI workloads on AWS.
Between AWS re:Invent and our 29th holiday shopping season, this is a particularly action-packed time of year at Amazon and we’re excited for what’s to come.”
3. Apple Inc. (NASDAQ:AAPL)
Apple Inc. is well-known for its iPhone (which is one of the key revenue generators for the company). Some of the other products by the company include the Mac, iPad, wearable, home, and accessories (including the Apple Watch, AirPods and Beats products, Apple TV and HomePod, as well as Apple-branded and third-party accessories).
Apart from the sale of products, the company also generates revenue through the provision of services such as advertising (including third-party licensing arrangements and the company’s own advertising platforms), AppleCare, cloud services, and digital content (through the App Store, from app downloads and in-app purchases, and also subscription-based services such as Apple Arcade, Apple Fitness+, Apple Music, Apple News, and Apple TV+), as well as through its payment services (including Apple Card, a co-branded credit card, and Apple Pay, a cashless payment service).
Apple Inc. has a financial year end every 30 September. Hence the table below is its full year results for the financial year ended 30 September 2023 (i.e., FY2022/23), compared to its full year results recorded the year before (i.e., FY2021/22 ended 30 September 2022):
| FY2021/22 | FY2022/23 | % Variance | |
| Total Revenue (US$’mil) | $394,328m | $383,285m | -2.8% |
| Net Profit (US$’mil) | $99,803m | $96,995m | -2.8% |
| Gross Profit Margin (%) | 43.3% | 44.1% | +0.8pp |
| Net Profit Margin (%) | 25.3% | 25.3% | – |
| Net Cash/ Debt (US$’mil) | -$85,110m | -$105,103m | N.M. |
| Dividend Per Share (US$) | $0.90 | $0.94 | +4.4% |
The slight dip in its total revenue and net profit can be attributed to as 2.4% decline in revenue from the sales of iPhone (by 2.4%), Mac (by 26.9%), iPad (by 3.4%), as well as from wearables, home, and accessories (by 3.4%).
Tim Cook, Apple Inc.’s CEO, said, “Today Apple is pleased to report a September quarter revenue record for iPhone and an all-time revenue record in Services. We now have our strongest lineup of products ever heading into the holiday season, including the iPhone 15 lineup and our first carbon neutral Apple Watch models, a major milestone in our efforts to make all Apple products carbon neutral by 2030.”
4. Meta Platforms Inc. (NASDAQ:META)
Meta Platforms Inc., previously known as Facebook Inc. (before a name change in 28 October 2021, with the move reflecting the company’s growing ambitions beyond social media and its focus on building the metaverse, a virtual world where people can interact, work, and play using augmented and virtual reality technologies), is the company behind the social networking sites Facebook and Instagram, along with messaging platforms Messenger and WhatsApp.
The company also offers virtual reality products through the business segment ‘Reality Labs’, where some of the products include Meta Quest virtual reality devices (as well as software and contents available through the Meta Quest Store).
In terms of revenue, it comes from the sale of advertising placements on Facebook, Instagram, and Messenger, as well as on third-party applications and websites, together with sales of consumer hardware products, software, and content from its ‘Reality Labs’ business segment.
Meta Platforms Inc. has a financial year end every 31 December, and the following table is the company’s results for the first 9 months of the year (ended 30 September 2023) compared to the same time period last year:
| FY2022 | FY2023 | % Variance | |
| Total Revenue (US$’mil) | $84,444m | $94,790m | +12.3% |
| Net Profit (US$’mil) | $18,547m | $25,080m | +35.2% |
| Gross Profit Margin (%) | 80.0% | 80.7% | +0.7pp |
| Net Profit Margin (%) | 22.0% | 26.5% | +4.5pp |
| Net Cash/ Debt (US$’mil) | +$5,329m | +$19,517m | > +100% |
Mark Zuckerberg, Meta Platform Inc.’s Founder and CEO, said, “We had a good quarter for our community and business. I’m proud of the work our teams have done to advance AI and mixed reality with the launch of Quest 3, Ray-Ban Meta smart glasses, and our AI studio.”
5. Microsoft Corporation (NASDAQ:MSFT)
The first thing that comes to mind about Microsoft Corporation is its multibillion-dollar investment in OpenAI, to which it now has a 49% ownership in.
Besides that, many are familiar with the tech company’s Windows Operating System, and its Office 365 suite of products, and its professional networking platform LinkedIn.
Apart from the above, the company also design and sell devices (including Surface and PC accessories), in the gaming business (through the Xbox gaming console, exclusive gaming content created through Xbox Game Studios), as well as search (Bing search engine) and news advertising business.
Microsoft Corporation has a financial year end every 30 June, and the following table is its latest 1st quarter financial performance for FY2023/24 (ended 30 September 2023), compared against the same time period last year:
| Q1 FY2022/23 | Q1 FY2023/24 | % Variance | |
| Total Revenue (US$’mil) | $50,122m | $56,517m | +12.8% |
| Net Profit (US$’mil) | $17,556m | $22,291m | +27.0% |
| Gross Profit Margin (%) | 69.2% | 71.2% | +2.0pp |
| Net Profit Margin (%) | 35.0% | 39.4% | +4.4pp |
| Net Cash/ Debt (US$’mil) | +$48,622m | +$67,754m | +39.3% |
| Dividend Per Share (US$) | $0.68 | $0.75 | +10.3% |
Satya Nadella, Chairman and CEO of Microsoft Corporation, said, “With copilots, we are making the age of AI real for people and businesses everywhere. We are rapidly infusing AI across every layer of the tech stack and for every role and business process to drive productivity gains for our customers.”
6. NVIDIA Corporation (NASDAQ:NVDA)
NVIDIA Corporation is also in the news of late, as it is caught in ‘chip war’ between the United States and China – particularly, in October 2023, where the company was told by the US government to halt the shipping of some of its high-end artificial chips to China without licenses immediately.
For those who may be unfamiliar with the company, its primary business is in the designing and manufacturing of Graphics Processing Units (or GPUs for short – specialised electronic circuits that accelerate the creation of images and video on computers; they are used in a wide range of applications, including gaming, professional visualisation, data centres, and artificial intelligence).
It reports its revenue under 2 business segments – the Compute & Networking segment (which encompasses data centre accelerated computing platform, networking, automotive AI cockpit, autonomous driving development agreements and autonomous vehicle solutions, electric vehicle computing platforms, Jetson for Robotics and other embedded platforms, NVIDIA AI Enterprise and other software, and cryptocurrency mining processors), and the Graphics segment (which includes GeForce GPUs for gaming and PCs, GeForce NOW game streaming service and related infrastructure, solutions for gaming platforms, Quadro/NVIDIA RTX GPUs for enterprise workstation graphics, virtual GPU, software for cloud-based visual and virtual computing, automotive platforms for infotainment systems, and omnivores enterprise software for building and operating metaverse and 3D internet applications).
The US-listed company has a financial year end on the last Sunday in January. Hence, the table below is its results for the first 9 months of the financial year (ended 29 October 2023) compared against the same time period last financial year (i.e., for the first 9 months of the financial year ended 30 October 2022):
| 9M FY2021/22 | 9M FY2022/23 | % Variance | |
| Total Revenue (US$’mil) | $20,923m | $38,819m | +85.5% |
| Net Profit (US$’mil) | $2,954m | $17,474m | > +100% |
| Gross Profit Margin (%) | 55.1% | 70.9% | +15.8pp |
| Net Profit Margin (%) | 14.1% | 45.0% | +30.9pp |
| Net Cash/ Debt (US$’mil) | -$8,150m | -$4,187m | N.M. |
| Dividend Per Share (US$) | $0.12 | $0.12 | – |
Jensen Huang, Founder and CEO of NVIDIA Corporation, said, “Our strong growth reflects the broad industry platform transition from general-purpose to accelerated computing and generative AI.
Large language model startups, consumer internet companies and global cloud service providers were the first movers, and the next waves are starting to build. Nations and regional CSPs are investing in AI clouds to serve local demand, enterprise software companies are adding AI copilots and assistants to their platforms, and enterprises are creating custom AI to automate the world’s largest industries.
NVIDIA GPUs, CPUs, networking, AI foundry services and NVIDIA AI Enterprise software are all growth engines in full throttle. The era of generative AI is taking off.”
7. Tesla Inc. (NASDAQ:TSLA)
Finally, we have Tesla Inc. – another company which I’m sure many are very familiar with, for their namesake brand of electric vehicles.
Apart from the designing, developing, manufacturing, and selling of electric vehicles directly to customers, it also design, manufacture, install, as well as sell and lease solar energy generation and energy storage products and relates services, and sales of solar energy systems incentives.
The company has a financial year end every 31 December, and the following is its financial performance for the first 9 months of the year ended 30 September 2023 compared against the same time period last year:
| 9M FY2022 | 9M FY2023 | % Variance | |
| Total Revenue (US$’mil) | $57,144m | $71,606m | +25.3% |
| Net Profit (US$’mil) | $8,869m | $7,069m | -20.3% |
| Gross Profit Margin (%) | 26.4% | 18.5% | -7.9pp |
| Net Profit Margin (%) | 15.5% | 9.9% | -5.6pp |
| Net Cash/ Debt (US$’mil) | +$16,596m | +$12,197m | -24.1% |
Closing Thoughts
So there you have it, a brief introduction to each of the ‘Magnificent Seven’ companies in the US market, along with a highlight of their financial results.
One thing about these 7 companies is that, most (if not all) have businesses we are familiar with. Also, these companies also hold their heaviest weightage in the S&P 500 index. In terms of their latest financial results, most of their results are pretty decent (at least in my personal opinion).
With that, I have come to the end of my share on the 7 US-listed companies today. Do take note that this post is purely for educational purposes only, and they do not represent any buy or sell calls for any of the companies discussed. You are strongly encouraged to do your own due diligence before you make any investment decisions.
Disclaimer: At the time of writing of this post, I do not have shares of any of the 7 companies above.
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