Tesla Dragging Down Magnificent Seven Stocks Despite Resilient Growth

The 'Magnificent Seven' stocks have underperformed so far this year, mainly due to Tesla's poor performance. The electric vehicle maker's stock is down by more than 20% year to date.

However, most of the other Magnificent Seven stocks are still up year-to-date, including Alphabet, Amazon, and Microsoft. These companies continue to do well in multiple industries, with their respective cloud computing platforms accelerating rapidly due to artificial intelligence (AI).

The valuations of these stocks may seem attractive, but a closer look at the numbers indicates that net income improvements aren't as good as they appear. Alphabet and Amazon both include gains from their investments in SpaceX and Anthropic in their net incomes, which has inflated their earnings.