The “Magnificent Seven” is a term coined by Bank of America analyst Michael Hartnett to describe seven industry-leading tech-focused companies: Microsoft (NASDAQ: MSFT), Apple (NASDAQ: AAPL), Nvidia (NASDAQ: NVDA), Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG), Amazon (NASDAQ: AMZN), Meta Platforms (NASDAQ: META), and Tesla (NASDAQ: TSLA).

What this actually means is that these seven companies are now so valuable that they make up a combined 35.5% of the S&P 500.

Thus the index of 500 companies is 35.5% dominated by the 7 technology titans.

Thus, the risk is that The Magnificent Seven are so valuable that they can single-handedly spark a so-called correction in the S&P 500. A correction is a fall of 10% to 20% in a major market index, so an average decline of 28% in the Magnificent Seven could put the S&P 500 in correction territory