Welcome to my video presentation. The article below is a transcript that I’ve edited for concision. For a “deeper dive” and several charts, watch my video.

The S&P 500 reached another record close last week. The rally is increasingly broad-based, but in the driver’s seat are the so-called Magnificent Seven mega-cap tech stocks:

Alphabet (NSDQ: GOOGL); Amazon (NSDQ: GOOGL); Apple (NSDQ: AAPL); Nvidia (NSDQ: NVDA); Meta Platforms (NSDQ: META); Microsoft (NSDQ: MSFT); and Tesla (NSDQ: TSLA).

These seven tech behemoths make up about 29% of the S&P 500’s market cap. They’re also responsible for about 60% of the S&P 500 index’s strong rise over the past 12 months. Below, I take a closer look at their operating results so far during this earnings season, and whether they can continue outperforming this year.

First, let’s quickly re-cap last week’s market action. The main U.S. stock market indices closed higher with the following weekly gains: Dow Jones Industrial Average +1.4%; S&P 500 +1.4%; and the tech-heavy NASDAQ +1.1%. The benchmark 10-year U.S. Treasury yield dipped -0.1%.

For the fourth quarter of 2023, the blended year-over-year earnings growth rate for the S&P 500 is 1.6%, according to data from FactSet. If 1.6% turns out to be the actual growth rate for the quarter, it would mark the second straight quarter that the index has reported positive earnings growth.

After falling to a year-over-year decline in earnings of -1.8% on January 19, the S&P 500 is now reporting year-over-year growth in earnings. Results are beating expectations, especially in the tech sector.

For Q4 2023, with 46% of S&P 500 companies reporting actual results (as of market close February 2), 72% of S&P 500 companies have reported a positive earnings surprise and 65% have reported a positive revenue surprise.

The technology sector is the largest contributor to this increase in earnings, and the largest contributor to the tech sector has been the Magnificent Seven, which have generally produced robust quarterly results and positive forward guidance (with a few caveats).

Move ‘Em On, Head ‘Em Up…

Google parent Alphabet posted Q4 earnings per share (EPS) of $1.64, versus $1.59 expected and $1.05 in Q4 2022. Cloud revenue was $9.1 billion, vs. $8.9 billion expected and $7.32 billion in Q4 2022. Ad revenue came in at $65.5 billion, vs. $65.8 billion expected and $59 billion in Q4 2022. Google ad revenue fell short of expectations. The company’s cloud revenue at $9.19 billion was up 25% year-over-year.

E-commerce pioneer Amazon reported Q4 earnings and revenue that beat estimates. The company also reported its highest-ever operating profit for the past holiday quarter; sales grew significantly in each of its operating segments. Last year’s aggressive cost-cutting campaign bore results, as Amazon’s operating margin soared from 1.8% in Q4 2022 to 7.8% in the past quarter.

Apple released operating results for its fiscal 2024 first quarter that beat expectations on the top and bottom lines. Driven by robust iPhone sales and another record in services revenue, Apple returned to growth this holiday quarter after four straight quarters of falling sales.

However, Wall Street is worried about Apple’s future prospects overseas. Revenue out of China, the company’s third largest region after North America and Europe, was lower than anticipated, reaching $20.8 billion versus forecasts of $23.5 billion. Sales of the iPhone are falling in China, where the economy is sputtering.

Microsoft’s revenue for its fiscal second quarter was $62 billion, a year-over-year increase of 18%. EPS was $2.93, an increase of 33%. The gains were driven by the cloud. The company’s Intelligent Cloud business accounted for $25.9 billion of the company’s total revenue of $62 billion, representing 20% year-over-year growth.

A decade ago, in February 2014, Satya Nadella took over as CEO at Microsoft, following in the footsteps of Bill Gates and Steve Ballmer.

Since Nadella took over, Microsoft’s share price has soared by 969%, beating Apple’s increase of 923% over the same period as well as the share price appreciations of Amazon, Meta and Alphabet. Over the same time frame, the S&P 500 index increased by 173% (see my video for charts).

Meta Platforms reported a tripling of profits in the fourth quarter and announced its first-ever cash dividend. Meta’s revenue rose 25% in the quarter, from $32.2 billion a year earlier.

The Facebook parent is the world’s largest social network. Meta ended 2023 with 3.07 billion monthly active users, up 3% (or more than a hundred million users), from the same quarter a year ago.

Nvidia is expected to report Q4 earnings on February 21, after the market close. In its last report in November, the chipmaker’s Q3 results blew past estimates (yet again) on the top and bottom lines.

Tesla’s Q4 EPS came in at 71 cents; analysts had expected 74 cents. The maker of electric vehicles (EVs) posted revenue that also missed the mark, at $25.1 billion versus expectations of $25.6 billion. For full-year 2023, Tesla reported delivery growth of 38%, which fell short of its own 50% growth target. Among the seven, Tesla faces the toughest obstacles, as the EV market gets more competitive.

Overall, though, the Magnificent Seven stocks are positioned to continue their outperformance this year (despite stretched valuations), due to several unstoppable “mega-trend” innovations that are powerful tailwinds, e.g. artificial intelligence; cloud services; “green” energy and transportation; remote collaboration; social media; the Internet of Things; 5G wireless; virtual/augmented reality; satellites and space exploration; nanotechnology; robotics…you name it.

According to FactSet, the share prices of six of the Magnificent Seven are projected to rise by double-digits this year, with only Tesla possibly posting a negative return.

At the same time, the market has been gaining greater breadth, as we can see by the rising New York Stock Exchange Advance/Decline line (NYAD), which makes the equity market as a whole less vulnerable to any Big Tech pullbacks.

The Week Ahead

Keep an eye on the following scheduled economic reports this week: S&P final U.S. services PMI, ISM services (Monday); consumer credit (Tuesday); initial jobless claims (Thursday).

Notably, several Federal Reserve officials are scheduled to speak throughout the week. Wall Street will be parsing their remarks to gain clues as to the Fed’s intentions on monetary policy, which will be announced at its March 19-20 meeting.

Recent data show the jobs market is running hot and the Fed may hit “pause” again next month, rather than cut interest rates. Regardless, the central bank’s tightening cycle has (most likely) come to an end, which is beneficial for growth investments, especially tech stocks. As interest rates fall this year and economic growth picks up steam, Big Tech will be a major beneficiary.

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John Persinos is the editorial director of Investing Daily.

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This article previously appeared on Investing Daily.