The Roundhill Magnificent Seven ETF (CBOE: MAGS) has jumped and is nearing its record high as its top constituent companies rally. MAGS ended last week at $72.60, about 1.2% below its peak of $73.47. The rally has coincided with rising inflows as investors bet on these companies.
MAGS ETF Inflows Jump as Top Stocks Jump
The MAGS ETF, which tracks the Magnificent Seven group of companies, has seen substantial inflows recently. The fund has attracted more than $1.1 billion in the last 30 days and $1.58 billion over the past 12 months. These inflows, together with the performance of its holdings, have lifted its assets under management to more than $5.5 billion.
The inflows happened as most Magnificent Seven companies have rebounded. Nvidia (NASDAQ:NVDA) stock jumped to a record high on Friday last week, completing a recovery that started in July when it bottomed out at $189.6. This rally continued after the company announced a $150 billion share repurchase program.
Microsoft (NASDAQ:MSFT) stock jumped to $518, its highest level since October last year and 49% above the year-to-date low. This rally has coincided with the ongoing rebound of most software stocks.
Meta Platforms (NASDAQ:META) stock peaked at $780, a few points below the all-time high of $794 as market participants cheered Muse, its AI agent that has gone viral this year. Amazon and Alphabet have also rallied, with Tesla being the only laggard.
Most of these stocks have also recovered because of the view that they have become undervalued. For example, Microsoft has a forward price-to-earnings ratio of 26, lower than the five-year average of 30. Nvidia, despite its revenue and profitability growth, has a forward multiple of 24.
Focus Now Shifts to Earnings Season
The next major catalyst for the MAGS ETF is the upcoming earnings season, which kicks off next week. Alphabet will be the first company in the group to report, on October 20. It will be followed by Tesla, Meta Platforms, Microsoft, Apple, and Amazon. Nvidia will be the last company in the ETF to release its results.
Analysts expect the upcoming earnings season to show that these firms continue to grow, with AI playing an important role. The average analyst estimate is for S&P 500 earnings growth of 29% in the third quarter.
Still, these results will matter because investors want tangible evidence that AI spending is boosting growth at companies such as Microsoft and Amazon. Signs that these companies plan to keep spending could also lift Nvidia, which counts them among its biggest customers.
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