Stocks appear to have come full circle since the start of the year, but with one key difference: the “Magnificent Seven” stocks are not as expensive as they were coming into 2025. The S & P 500 is virtually unchanged on the year, following an extraordinary selloff and recovery over the past two months. In that time, the index slumped 20% from its February peak following the April 2 tariff announcement, then made back all those losses. The broader index is now a little more than 3% off its record high. For all off of 2025, the broad market index has eked out a 0.8% gain, not including reinvested dividends. .SPX YTD mountain S & P 500 in 2025 This time, however, there’s a different nuance in the market, according to Marta Norton, chief investment strategist at Empower Investments. She pointed out that while the overall market is more expensive than it was at the start of the year, the Magnificent Seven stocks are cheaper than they were. “At the start of the year, the Mag Seven were very expensive, and you felt like that was going to lead the market down. But at this point in the year, Mag Seven is, you know, certainly rallied back a bit, but it’s cheaper than it looked at the start of the year, and it’s the rest of the market around the Mag Seven that looks expensive,” said Norton. “So, there’s this weird dichotomy where the area of greatest risk doesn’t look to be quite as big a risk, at least from a valuation standpoint, that it had [at] the start of the year,” Norton added. Take Nvidia , which started 2025 with a forward P/E of 31.3, is now trading at 29.6 forward earnings, according to FactSet data. Apple , which was at 33.0, now sells for 26.6 times the coming year’s profits. Google-parent Alphabet , which was trading at 21.1, is now at 17.7. Amazon , previously at 35.2, now changes hads at 31.3. Only two of the megacaps stocks trade above their Dec. 31 forward valuations. Meta Platforms , which was at 23.0, is now at 24.3. Microsoft , once at 29.9, is now 30.6. Meanwhile, the broader market looks more expensive. The S & P 500, at 21.3 currently, is trading about where it was in December. But consumer staples companies were at 18.6 times at the end of last year, and are now at 19.9. The cheaper Mag Seven valuations suggest there could be some momentum left in the market even after its huge upswing since early April, since the elite group combined accounts for roughly 30% of the S & P 500 market value. Norton, however, is skeptical the market will rally meaningfully higher in 2025. She thinks the S & P 500 will be rangebound for the rest of the year as expensive valuations in the rest of the market, as well as the impact of tariffs on corporate earnings, will offset any benefits from deregulation later this year. “Should we see the Mag Seven continue to recover, that would certainly be a force for strength in the market, but we still have to watch that remaining 70%,” Norton said. Other Wall Street firms are sounding similar concerns. In fact, a note from UBS said that “MAG-7 dominance risk has yet again returned” following Nvidia’s latest earnings beat, a development that suggests the market is “now priced for perfection and is vulnerable to even slightly disappointing news.”
