By Teresa Rivas

Russia's Leo Tolstoy wrote that all happy families are alike, and for much of the past few years, the same could have been said of the megacap stocks' returns. That's no longer the case.

The Magnificent Seven -- Google parent Alphabet, Amazon.com, Apple, Facebook parent Meta Platforms, Microsoft, Nvidia, and Tesla -- never really traded in true lockstep. That was one reason why oversize holdings of the group in 2023 and 2024 didn't lead to too much concentration risk. Despite these stocks' different catalysts, their longer-term momentum was still all in one direction -- higher.

Yet that pattern has broken down in 2025, Bespoke Investment Group says. The nine S&P 500 companies with market values around a trillion dollars or more -- the Magnificent Seven, Berkshire Hathaway, and chip company Broadcom -- no longer trade as a block, Bespoke wrote Wednesday.

So far this year, the group is trading right around break-even on average, with a median gain of 5.37%, but that belies big swings in either direction. Meta Platforms has jumped 18.5% so far this year, while Microsoft -- the only other company with double-digit percent gains -- has risen 12.2%. By contrast, Tesla is down 23.6% and Apple has lost 19.6%.

Looking at the past 12 months, all nine stocks are trading higher, but that performance is also fairly varied. Apple is up just 4.3% and Broadcom up nearly 70%.

That said, even throwing in your lot with the weakest of the trillion-dollar club is better than betting on the little guys. The nine smallest market-cap companies in the S&P 500 tend to trade together, too, but in the worst way. This group consists of casino operator Caesars Entertainment; solar tech firm Enphase Energy; flooring products maker Mohawk Industries; investment firm Invesco; energy exploration firm APA; biotech Charles River Labs; chemical company Albermarle; generator maker Generac; and utility AES.

All nine have posted double-digit percentage losses so far this year, with an average drop of 20.7%. The best 2025 performer, Mohawk, is still down 13.5%, compared with a 37% decline for laggard Enphase.

"Whereas more than 42 percentage points separates the best and worst performances of the nine largest stocks in the S&P 500, for the nine stocks with the smallest market caps, the spread is just 23 percentage points," Bespoke notes. "So, while the rising tide hasn't impacted each of the nine largest stocks equally, the nine smallest stocks have been weighed down by a more similar anchor."

That might be cold comfort to Apple and Tesla investors. But even as the Magnificent Seven trade might be breaking down, those megacaps are still crushing smaller caps.

"Even on a relative strength basis, the nine stocks with the smallest market caps in the S&P 500 have consistently underperformed," Bespoke writes. "Earlier this month, they even made a new low relative to the mega caps."

In this bull market, bigger really is better.

Write to Teresa Rivas at teresa.rivas@barrons.com

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June 11, 2025 12:06 ET (16:06 GMT)

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