Key facts
- Fund manager David Giroux has removed Tesla and Apple from the "Magnificent Seven" group.
- Giroux favors Broadcom and Oracle as replacements, citing their AI-driven growth and cloud expansion.
- Tesla faces increased competition and uncertain autonomous driving prospects.
- Apple's removal is attributed to slow iPhone upgrades and geopolitical risks.
- Broadcom's AI chip revenue saw a 46% year-over-year increase.
- Oracle expects its cloud revenue to grow by 40% in the next 12 months.
Fund manager David Giroux has removed Tesla and Apple from the elite "Magnificent Seven" group of tech giants, suggesting that semiconductor powerhouse Broadcom and database giant Oracle are better suited to join the cohort. Giroux cited increasing competition and uncertain prospects for Tesla's autonomous driving technology, while noting Apple's slow iPhone upgrade cycles and geopolitical risks.
According to Vimal Patel, portfolio manager of the Columbia Seligman Global Technology Fund, investors should consider selling shares of Tesla and Apple. Patel highlighted Tesla's mounting competition from traditional automakers and Chinese EV makers, alongside price wars pressuring margins. He also expressed skepticism about the commercial success of autonomous taxis and humanoid robots, stating, "We don't buy hopes and dreams."
For Apple, Patel pointed to a loyal user base but expressed frustration with slow iPhone upgrade cycles. Geopolitical risks, particularly potential tariffs, were also cited as significant headwinds for Apple.
In contrast, Patel favors Oracle for its solid growth momentum and expansion into cloud computing, projecting a 40% surge in cloud revenue over the next 12 months. Broadcom is favored for its specialized ASICs that offer customized solutions for hyperscalers at lower cost and power consumption. Broadcom's AI chip revenue grew 46% year-over-year in its last quarter, contributing to a 20% rise in total revenue, with expectations of around 60% growth in AI chip revenue for the next quarter.
The remaining five giants—NVIDIA, Microsoft, Amazon, Meta, and Google—are expected to continue benefiting from AI-driven demand in their respective sectors. The "Magnificent Seven" collectively account for 34% of the S&P 500's value, with their AI and tech innovations fueling gains.