The "Magnificent Seven" is a term coined by Bank of America analyst Michael Hartnett, referring to the seven heavyweights in the S&P 500 index: Microsoft, Apple, Alphabet, Amazon, Tesla, Meta Platforms, and Nvidia. These seven stocks have been pivotal to the U.S. stock market rally in 2023, and they are responsible for nearly all the S&P 500s gains this year. While all of these companies have solid competitive advantages, Meta Platforms and Microsoft seem better prepared to emerge as formidable long-term investments, thanks to the strong monetization potential of their artificial intelligence (AI) offerings and rapidly improving financials.

The Magnificent Seven are industry leaders with relatively sustained moats and/or competitive edges. They have outperformed the US market this year and have greatly contributed to the benchmark S&P 500s higher performance. However, according to some experts, the long-term prospects of these stocks are mediocre at best, and it is rare for the largest companies to still be among the largest in a decades time.

Investors can buy individual stocks of the Magnificent Seven or invest in ETFs that hold these stocks. However, it is important to note that investing in these stocks or ETFs comes with risks, and investors should carefully consider their investment goals and risk tolerance before investing.