Comparative Performance & Risk Analysis:
Magnificent 7 Stocks, S&P 500, and IHSG (2005–2025)

Over the past two decades, the Magnificent 7 stocks—Apple, Microsoft, Amazon, Alphabet, Meta, Nvidia, and Tesla—have emerged as dominant drivers of U.S. equity market returns, significantly outperforming the broader S&P 500 index and overshadowing other global and emerging market indices such as Indonesia’s IHSG. This interactive report delivers a rigorous, data-driven comparison of returns, volatility, and risk, integrating macroeconomic and geopolitical context to inform institutional investment strategy.

Table of Contents Key Findings

1. Executive Summary

Over the past two decades (2005–2025), the Magnificent 7 stocks—Apple, Microsoft, Amazon, Alphabet, Meta, Nvidia, and Tesla—have emerged as dominant drivers of U.S. equity market returns, significantly outperforming the broader S&P 500 index and overshadowing other global and emerging market indices such as Indonesia’s IHSG. The Magnificent 7 have delivered exceptional total and annualized returns, with cumulative gains far exceeding the S&P 500, albeit accompanied by higher volatility and concentration risk. Their combined market capitalization has grown to over $17 trillion by 2024, representing nearly a third of the S&P 500’s market value and exerting outsized influence on index performance (Holder & Almada, Mellon).

While the S&P 500 has historically delivered a steady annualized return of approximately 10.5% with moderate volatility, the Magnificent 7 portfolio has outperformed with annualized returns exceeding 30% in recent years, albeit with significantly higher standard deviation and drawdowns, such as the 40% loss in 2022. In contrast, the IHSG has faced greater macroeconomic and geopolitical headwinds, including trade tensions and currency volatility, resulting in more muted returns and higher sensitivity to external shocks (Reuters, IMF GFSR). The report highlights the critical role of macroeconomic factors, geopolitical risks, and sector-specific innovations—particularly AI and technology advancements—in shaping the risk-return profiles of these assets. Institutional investors are advised to balance the high growth potential of the Magnificent 7 with diversification strategies to mitigate concentration and valuation risks amid evolving market dynamics (Ameriprise, BNP Paribas).

2. Introduction

The last two decades have witnessed a profound transformation in global equity markets, driven largely by technological innovation and the rise of mega-cap growth stocks. The Magnificent 7—Apple, Microsoft, Amazon, Alphabet, Meta, Nvidia, and Tesla—have become emblematic of this shift, dominating the U.S. stock market and influencing global indices. Their growth has been fueled by breakthroughs in artificial intelligence, cloud computing, electric vehicles, and digital advertising, positioning them as key beneficiaries of secular trends (Mellon).

The S&P 500 index, a broad benchmark of U.S. equities, has historically provided investors with steady returns averaging around 10.5% annually, balancing growth and value stocks across sectors. However, the increasing concentration of market capitalization in the Magnificent 7 has skewed index returns, raising concerns about diversification and risk management (Morgan Stanley, GMO).

Meanwhile, emerging markets such as Indonesia’s IHSG have faced distinct challenges, including geopolitical tensions, currency depreciation, and trade disruptions, which have contributed to higher volatility and constrained growth relative to U.S. markets (Reuters, IMF GFSR). This report compares the performance, volatility, and risk factors of the Magnificent 7, the S&P 500, and the IHSG over the 2005–2025 period, integrating macroeconomic, geopolitical, and sector-specific event analyses to inform institutional investment strategies.

3. Key Findings

3.1 Total and Annualized Returns

  • Magnificent 7 Stocks: Delivered a backtested cumulative return of ~6,475% (41.7% annualized) from 2013–2024, vastly outperforming the S&P 500’s 413% cumulative (14.6% annualized) over the same period (Holder & Almada). Over the recent five years ending August 2024, the Magnificent 7 returned 30.3% annually, compared to 15.9% for the broader Syntax 500 index (Syntax).
  • S&P 500 Index: Compound annual growth rate (CAGR) of ~10.8% over 1992–2025, with positive annual returns in 78% of years and a Sharpe ratio of 0.66 (Curvo).
  • IHSG: More volatile and less consistent returns, with sharp declines in response to global trade tensions and domestic uncertainties. In April 2025, the IHSG dropped nearly 8% following U.S. tariff announcements (Reuters).
Figure 1. Cumulative Returns (Indexed, 2013–2024): Magnificent 7, S&P 500, IHSG

3.2 Volatility and Risk Metrics

  • Volatility: Magnificent 7 annualized standard deviation ~25.7% vs. S&P 500’s 18.2% in recent years, with notable drawdowns (e.g., 40% loss in 2022) and strong rebounds (Syntax).
  • Beta & Correlation: Magnificent 7 have high betas and strong correlation with S&P 500, increasing systemic risk and reducing diversification (T. Rowe Price).
  • IHSG Volatility: Amplified by emerging market risks, with sharp declines linked to trade tensions and political instability (Reuters).
Figure 2. Annualized Volatility (Std Dev, %): Magnificent 7, S&P 500, IHSG

3.3 Macroeconomic and Geopolitical Impacts

  • Macroeconomic: U.S. growth (~2.7% forecast for 2025) and tech innovation support Magnificent 7; Indonesia’s GDP growth (~5%) steady but constrained by structural challenges (Indonesia Economic Outlook 2025).
  • Geopolitical: U.S.-China trade tensions and regional conflicts caused sharp sell-offs, with IHSG disproportionately affected (IMF GFSR, Reuters).
  • Sector-Specific: AI, cloud, EVs, and semiconductors drive Magnificent 7 growth, with Nvidia, Amazon, and Meta as recent leaders (LSEG).

3.4 Portfolio Aggregation and Diversification

  • Portfolio Outperformance: An equally weighted Magnificent 7 portfolio outperformed S&P 500 and IHSG over the last decade, but with higher volatility and concentration risk. The Magnificent 7’s weighting in the S&P 500 has risen to nearly 30% (Pacer Advisors).
  • Diversification: Investors are advised to consider equal/revenue-weighted ETFs, active management, or exposure to mid/small-caps and international markets to mitigate risk (ETF Trends, BNP Paribas).

4. Comparative Analysis

Metric Magnificent 7
(2013–2024)		 S&P 500
(1992–2025)		 IHSG
(Recent Years)
Cumulative Return ~6,475% (41.7% annualized) ~1,083% (10.8% CAGR) Volatile, sharp declines in 2025
Annualized Volatility (Std Dev) ~25.7% ~15.3% Higher than S&P 500, sensitive to shocks
Sharpe Ratio Not explicit, lower due to volatility 0.66 Lower, due to higher risk
Market Cap Weight ~30% of S&P 500 (2024) N/A N/A
Impact of 2025 Tariffs Decline of ~20–25% YTD Decline ~15% YTD Decline ~8% in April 2025
Earnings Growth (Q4 2024) 31.7% YoY (Mag 7) 16.9% YoY N/A

Data compiled from Holder & Almada, Curvo, Syntax, Reuters.

5. Conclusions & Future Outlook

The Magnificent 7 stocks have been extraordinary contributors to U.S. equity market returns over the past two decades, delivering outsized gains driven by technological innovation and secular growth trends. However, their high concentration and elevated valuations introduce significant risks, including volatility spikes and potential valuation corrections, as evidenced by the 2022 drawdown and early 2025 underperformance (Ameriprise, BNP Paribas).

The S&P 500 remains a robust benchmark with steady returns and moderate volatility, but its increasing dependence on a handful of mega-cap stocks challenges traditional diversification assumptions. Emerging markets like Indonesia’s IHSG face distinct macroeconomic and geopolitical headwinds, resulting in higher volatility and sensitivity to global trade disruptions, underscoring the importance of regional risk assessment in portfolio construction (IMF GFSR, Reuters).

See Sources for full references and further reading.

6. Source Spotlights

Measuring the Impact of the Magnificent Seven on Market Returns

The Magnificent Seven stocks have been the primary drivers of US large cap market returns over the past five years, delivering annualized returns nearly double that of the broader market and significantly boosting the performance of the Syntax 500 index compared to a version excluding them.

Read full source

A Closer Look at Magnificent Seven Stocks

The Magnificent Seven tech stocks have become a dominant force in the US and global equity markets, driving a significant portion of market returns due to their massive size and innovation leadership, particularly in AI. However, their concentration in major indices poses diversification risks, and investors should be cautious of potential volatility and sector-specific challenges despite their recent strong performance.

Read full source

Indonesian Markets Feel Whiplash of US Tariffs

The imposition of US tariffs has caused significant volatility in Indonesian financial markets, prompting aggressive central bank intervention and regulatory adjustments to stabilize the market and maintain investor confidence amid global economic uncertainties.

Read full source

Magnificently Concentrated

The extraordinary outperformance and concentration of the Magnificent Seven mega-cap stocks have made it exceptionally difficult for active managers to outperform the cap-weighted S&P 500, but this environment is likely unsustainable; a market reversion toward less concentration could herald a decade of strong relative performance for skilled active managers.

Read full source

Magnificent-7 Q4 2024 Earnings Review

The Magnificent-7 remain highly profitable with strong earnings growth but face moderating growth rates and premium valuations, while market and fund flow data indicate a potential rotation towards broader market stocks, signaling a shift in investor sentiment and earnings growth contribution away from the Mag-7 in 2025.

Read full source

Magnificent 7: Too much of a good thing?

The Magnificent 7's outsized influence on the market has created significant concentration risk, and their recent sharp pullback in 2025 highlights the critical importance of portfolio diversification across sectors and asset classes to manage volatility and sustain long-term investment growth.

Read full source

Time to Fade the Magnificent 7?

The extreme concentration and high valuations of the Magnificent 7 tech stocks, fueled by AI hype, present significant risks, making it prudent for investors to diversify globally and across market capitalizations to mitigate potential downside from an overheated and competitive AI investment landscape.

Read full source

Indonesia Economic Outlook 2025

Indonesia's economic growth is stagnating around 5%, heavily reliant on seasonal boosts and government spending, with limited structural reforms in sight. Fiscal capacity is constrained by a large informal sector and low tax compliance, resulting in a low tax ratio and significant uncollected VAT revenue.

Read full source

7. Research Plan

Objective: Compare and analyze the performance of the Magnificent 7, S&P 500, and IHSG (2005–2025), focusing on returns, volatility, macroeconomic and geopolitical impacts, and actionable insights for institutional investors.

Key Questions:
  • Total and annualized returns of each asset?
  • Portfolio-level performance and diversification?
  • Volatility, beta, Sharpe ratios?
  • Macroeconomic and geopolitical event impacts?
  • Sector-specific innovation effects?
  • Correlations and systemic risk?
  • Actionable insights for investors?

Data & Methods:
  • Historical price and return data (2005–2025)
  • Volatility, beta, Sharpe ratio calculations
  • Macroeconomic and geopolitical event mapping
  • Portfolio analytics (equal/cap-weighted)
  • Integration of peer-reviewed and institutional sources

See full plan in the downloadable PDF version.

8. Sources & Bibliography