Magnificent 7 Update. On Fire. Expensive.

Magnificent 7 Update. On Fire. Expensive.
Tesla could have an exemplary 3rd Quarter.
Nvidia is accused of antitrust by China.
Apple has lines out the door again.
Meta, Microsoft, Google and Amazon all continue with double-digit year-over-year revenue growth, which is quite a feat for multi-trillion-dollar companies.
The good news is already priced in. (However, there is a way to participate in the party.)
Email [email protected] if you’d like an updated Magnificent 7 Stock Report Card.
 
Here are the things we’ll cover in this blog.
 
Tesla
Nvidia
Apple
The Fantastic 4 or the Magnificent 7?
Sales Growth
Valuations
The Macro Economy
Lessons From April’s -20% Dive
 
And here is more information on each line item.
 
Tesla
The U.S. electric vehicle tax credit ends September 30, 2025. While that’s not great for Tesla going forward, Tesla is likely to have a gangbuster 3rd quarter, as everyone rushes to beat the clock. Will the 3rd quarter of 2025 be the first time that the company delivers more than 500,000 vehicles? The all-time high was the 4th quarter of 2024, when Tesla deliveries were 495,570 vehicles. Tesla earned $25.7 billion in revenue that quarter. It is quite possible (probable?) that the 3rd quarter could shatter those records. The company will report their 3Q deliveries on October 2, 2025.
 
This is quite different from Tesla’s 2nd quarter, when deliveries were down -13.5% year over year and revenue dropped -12%. With Wall Street always singing, “What have you done for me lately?” there could be a jump in share price after the deliveries are announced on Thursday. However, there’s more to the story, which complicates our ability to profit. (Buying high is rarely a great idea.)
 
China is the biggest market for EVs in the world, purchasing 11 million of the 17 million EVs sold in 2024. China’s own BYD is now the largest EV seller globally, surpassing Tesla in 2024. We can’t buy BYD cars here in the United States. However, other countries can, including Mexico, Brazil, Thailand, Germany, Norway, Australia, Japan, South Korea and countries in the Middle East and Africa.
 
Additionally, due to the plethora of electric vehicle options that are now available, there is a price war going on. Tesla’s net income was $15 billion in 2023. It dropped to $7 billion in 2024. The company has only made $1.58 billion in 2025. This begs the question of whether a company that might only earn $4 billion or less in 2025 should really be worth $1.46 trillion. With a price/earnings ratio of 236, Tesla is one of the most expensive stocks on Wall Street.
 
Nvidia
On Sept. 15, 2025, Nvidia was accused of violating anti-monopoly laws by China. While no punishment was mentioned in the statement, the Financial Times reported that Chinese authorities have ordered top tech firms to halt purchases of Nvidia chips and cancel existing orders. Nvidia’s competition in China has intensified with Huawei, Cambricon, Baidu and Alibaba all reportedly making chips that are comparable to Nvidia’s exportable products. (Nvidia has export controls and is not allowed to send its most advanced semiconductors to certain nations, including China.)
 
China accounts for about 6% of Nvidia’s revenue.

 
A miss on revenue from the region should not significantly impact the next quarterly earnings report. Nvidia could still see $50+ billion in sales with growth of 44.7% year over year. However, investors will get nervous if the situation becomes more tense. Nvidia’s price/earnings ratio is quite lofty, at 50. Nvidia will likely report 3rd quarter earnings the 3rd week of November.
 
Apple
The lines were back at Apple last week. The iPhone 17 launch was a success, garnering plenty of gushing reviews. However, since the phone was released on September 19, 2025, we won’t see the bump in revenue until the December quarter earnings are released at the end of January 2026.
 
The September quarter revenue is expected to increase mid to high single digits on a year-over-year basis – nothing mind-blowing, particularly since Apple’s price/earnings ratio is 35 – quite lofty for a company with single-digit revenue growth. However, if the forward outlook is exciting, based upon a jump in sales from iPhone 17, we could see investor interest pushing the share price up. Of course, all of this assumes that the macro economy stays strong. With valuations on all the Magnificent 7 companies, including Apple, high, rising unemployment and sticky inflation, a continued party on Wall Street is not a given.
 
We won’t see the September quarter results until around Halloween (the date that Apple reported results in 2024).
 
The Fantastic 4 or the Magnificent 7?
Right now, the Magnificent 7 companies all look spectacular, particularly in product sales. Their share prices are all trading very close to their all-time highs, making investors happy. The strength of these companies is responsible for over 1/3 of the S&P500 performance. All these companies have a treasure trove of cash.
 
After the EV tax credit expires on Sept. 30, 2025, Tesla could experience a marked slowdown. Will U.S. car buyers be as interested in Tesla vehicles once the tax credit expires? Will they shop for more affordable models, or used cars? The U.S. market is responsible for 52.5% of Tesla’s revenue. Additionally, there could continue to be much lower earnings for Tesla, due to the EV price wars.
 
Amazon, Apple and Tesla are at the lower end of revenue growth and profit margins of the Magnificent 7. Apple has elevated debt (with plenty of cash to cover it).
 
Sales Growth
It’s extraordinary that the multi-trillion dollar Titans of Silicon Valley are still experiencing impressive year-over-year sales growth. Nvidia is at 56%, Meta 22%, Microsoft 18%, Alphabet 14%, and Amazon at 13%. Email [email protected] if you’d like an updated Magnificent 7 Stock Report Card.
 
Valuations
This is the piece of the puzzle that a lot of Main Street investors aren’t getting good information on. Stocks are very expensive. As Liz Ann Sonders, the Managing Director and Chief Investment Strategist at Charles Schwab, said in her May 30, 2025 podcast, “I feel sometimes like we're in the midst of a late '90s kind of market, where you remember the tech bubble, and it just kept going and going and going, and nothing seemed to really do anything to it until it stopped.” As a reminder, in the Dot Com Recession, the NASDAQ Composite Index dropped -78% between the high of March 2000 and the low of October 2002. It took 15 years to get back to the highs set in March 2000.
 
The Macro Economy
There are many indicators that suggest equities are quite elevated. One area of particular concern is that margin debt has hit a new high. Margin debt is currently at $1.1 trillion according to FINRA.

The reason this is a concern is that there are limits to the amount of money one can borrow on margin. When stocks are high and keep rising, it’s not a problem. However, if share prices start falling, investors who have borrowed money will have to deposit more cash to cover the losses or sell stocks (potentially at a loss) to cover the margin. The consequence of very high margin debt is that volatility becomes extreme, and the speed of the plunge can be very pronounced, as panicked sellers are forced to cover their debt. (Brokerages can sell stock to cover the problem, if the account holder doesn’t fix things fast enough.)
 
There are breakers in place to stop a correction from turning into a crash. However, we did see a drop of -20% between February 19 and April 8, 2025.
 
Lessons From April’s -20% Dive
Nvidia’s price is currently $178 a share. On April 4, 2025, you could have bought the stock for $94. At $440/share, Tesla is close to its all-time high again. However, the price was only $222 on April 8. Meta dropped -34% between February and April of this year.
 
The Magnificent 7 is truly amazing in terms of revenue growth, profit margins and even the cache of cash that most of these companies have. However, because they are very expensive, whenever there is a market downturn, these companies drag stocks down, dropping far lower than the rest of the S&P500.
 
This also happened in 2022. When the S&P500 dropped -19.44%, Many of the Magnificent 7 stocks were down by 50% or more, including Nvidia.
 

Bottom Line
In our pie chart system, and at our Financial Freedom Retreats, we have the Magnificent 7 represented in the large cap growth fund and in many of the targeted hot industry funds. If you have been overweighting Magnificent 7 (as we are), now is a great time to rebalance and capture gains at an all-time high. We still want to have Magnificent 7 in our portfolio, but in an age-appropriate, diversified, targeted way. The rebalancing helps us to retain our wealth, in case volatility kicks in and prices plunge, as we have seen multiple times over the last five years, with the most recent episode only five months in the rear-view mirror. This keeps us on the right side of the trade. There is a reason why “Buy low, sell high” is an age-old investing aphorism.

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If you’d like an unbiased 2nd opinion on your current wealth plan, email [email protected] for pricing and information.

Receive the best price when you register with friends and family. Visit NataliePace.com to learn more. Call 310-430-2397 or email [email protected] for pricing, additional information and to register.

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Natalie Wynne Pace is an Advocate for Sustainability, Financial Literacy & Women's Empowerment. Natalie is the bestselling author of The ABCs of Money (6th edition) and The Power of 8 Billion: It's Up to Us, and is the co-creator of the Earth Gratitude Project. She has been ranked as a No. 1 stock picker, above over 835 A-list pundits, by an independent tracking agency (TipsTraders). Her book The ABCs of Money remained at or near the #1 Investing Basics e-book on Amazon for over 3 years (in its vertical), with over 120,000 downloads and a mean 5-star ranking. The 6th edition of The ABCs of Money and the 2nd edition of Put Your Money Where Your Heart Is (2nd edition) are the most recent releases of these books. Follow her on Instagram. 
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Natalie Pace's easy as a pie chart nest egg strategies earned gains in the last two recessions and have outperformed the bull markets in between. That is why her Investor Educational Retreats, books and private coaching are enthusiastically recommended by Nobel Prize winning economist Gary S. Becker, TD AMERITRADE chairman Joe Moglia, Kay Koplovitz and many Main Street investors who have transformed their lives using her Thrive Budget and investing strategies. Click to view a video testimonial from Nilo Bolden.​​

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Important Disclaimers
Please note: Natalie Pace does not act or operate like a broker. She reports on financial news, and is one of the most trusted sources of financial literacy, education and forensic analysis in the world. Natalie Pace educates and informs individual investors to give investors a competitive edge in their personal decision-making. Any publicly-traded companies, funds or projects mentioned by Natalie Pace are not intended to be buy or sell recommendations.

ALWAYS do your research and consult an experienced, reputable financial professional before buying or selling any security, and consider your long-term goals and strategies. Investors should NOT be all in on any asset class or individual stocks. Your retirement plan should reflect an age-appropriate, diversified wealth plan, which has been designed strategically, with the assistance of financial professionals who are familiar with your goals, risk tolerance, tax needs and more. The "trading" portion of your portfolio should be a very small part of your investment strategy, and the amount of money you invest into individual companies should never be greater than your experience, wisdom, knowledge, patience and diversified strategy.  
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Information has been obtained from sources believed to be reliable. However, NataliePace.com does not warrant its completeness or accuracy. Opinions constitute our judgment as of the date of this publication and are subject to change without notice. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument.