known as the magnificent seven, grew 75% in 2023,

leaving the rest of the S&P 500 in the dust.

But if we look at each individual stock in 2024,

the group has an outlier.

- Tesla has kind of stuck out like a sore thumb

in terms of the magnificent seven.

- [Narrator] This year, Tesla's share price is down

more than 25%.

- If Tesla's stock keeps falling, that might be bad news

for the S&P 500,

simply because it would drag the index down.

- [Narrator] Here's what Tesla's slide

says about this elite group of tech stocks

and why investors are concerned.

Apple, Microsoft, Amazon,

NVIDIA, Alphabet, Tesla, Meta.

♪ The magnificent seven ♪

- [Narrator] Unlike these gunslingers,

this magnificent seven is by some measures

worth more than all the stocks

from these four countries combined,

but that dominance has bred doubt.

- So one big risk, I think, on investors' minds

is that while these stocks have helped drive

the market higher toward repeated highs to start 2024,

there is concern that they could stage a big U-turn,

- [Narrator] And it wouldn't be the first time.

In 2022, they collectively lost $4.7 trillion in value

amid worries that rising interest rates

could cause a recession dragging down the rest of the index.

- People were thinking, has the dot com bubble just burst?

You know, are these stocks done for good?

- [Narrator] But in May, 2023,

that changed when NVIDIA announced record profits

for an unexpected reason.

- [Colette] Generative AI drove significant upside in demand

for our products, creating opportunities

and broad-based global growth across our markets.

- Many investors looking at its earnings,

hearing its earnings calls,

like, their mouths were to the floor.

They just had this incredibly blockbuster earnings report

that shocked investors

and made investors think, we have to bet big on AI.

And that sent NVIDIA shares soaring

and a lot of these other stocks soaring as well.

- [Narrator] Around the same time, strong economic data

and easing inflation gave tech stocks another boost.

That led to the magnificent seven's 75% rally.

But for Tesla, which was gearing up

for the Cybertruck launch,

there was a rough road ahead.

- You have elon musk saying-

- [Elon] You know, I just want to temper expectations

for Cybertruck.

- And that hit its stock pretty hard.

- [Narrator] Musk later revealed that Tesla fell behind

Chinese EV maker BYD in quarterly sales

for the first time.

All of this helped lead to that drop in its share value.

- In terms of concerns about, you know, bubbles

or stock being in a bubble,

Tesla is the one that people (chuckling)

worry about the most.

- [Narrator] A bubble is when shares of a stock

are pumped higher than they're worth,

often driven by investor excitement.

- Tesla has always been valued like a technology company,

so that gives it a higher valuation

because investors tend to value tech companies

higher than they do say car companies.

So some of the really bearish investors on Tesla say,

"Hey, this is just a car company.

This is not a tech company

and it doesn't deserve this kind of rich valuation premium."

- [Narrator] But there may be bubbles

within the technology sphere too.

- I've heard investors say that they think

AI in the stock market and the impact of AI

and all these AI beneficiaries are a huge bubble.

The issue is that we're still in early innings

of the AI game in the stock market,

and it's gonna be years before we find out, you know,

what are the implications of AI?

How are people and companies actually using this technology?

So that seems pretty far out in the future right now.

- [Narrator] While some investors are uncertain

about the magnificent seven's future,

others are doubling down on their positions.

- Some individual investors

and even institutional investors I've been speaking with

are kind of afraid to bet against these stocks

because they've been so dominant in the market.

- [Narrator] Some investors say that Tesla

doesn't deserve to be part of that group, but-

- The thing is, people have been saying that Tesla

is in a bubble for like five years now.

Of course, for the most part

it's held up the past few years.

So time will tell if it ends up kind of collapsing

and being the bubble that a lot of investors say it is.