-
Mag-7 stocks rose 5.6% in Oct25, outperforming the S&P500 (+0.2%) and the Nasdaq 100 (+3.4%). GOOG was the biggest gainer (+15%) after posting solid revenue growth in both Search and Cloud. AMZN (+12%) was the second-largest gainer after AWS growth reaccelerated.
-
Mag-7 mostly beat revenue expectations for CY3Q25 results. CY3Q25 revenue increased 18% YoY, the highest quarterly YoY increase in four years. CY3Q25 PATMI increased 38%, the 10th consecutive quarter of growth and the highest since 1Q24. Hyperscalers’ 3Q25 operating margins increased by 17bps sequentially, marking the 10th straight quarter of sequential margin expansion and indicating growing ROI from their AI investments. iPhone sales increased 6% YoY in 3Q25, the first quarter with the new iPhone 17, but supply constraints curbed growth. Mag-7’s performance in Oct25 was further supported by the US Federal Reserve (FED) lowering interest rates by another 25 bps in Oct, which boosted equity valuations for growth-driven Mag-7 stocks.
-
We maintain OVERWEIGHT on the Mag-7. Except for TSLA, we believe the Mag-7’s earnings growth will continue to outperform both the S&P 500 and Nasdaq 100. Tailwinds include greater adoption and demand for AI from sovereign nations like the EU and the UAE, the US government’s AI Action Plan unveiled in Jul25, and more rate cuts expected in 2026.
Continue Reading
