We haven’t seen this level of market concentration since the Great Depression

But if you’d invested the same amount into the tech sector instead, you’d have over $63,000 today. That’s an annual growth rate of 20.4%—double the yearly return on the equal weight S&P.

Since April, tech has more than doubled the returns of the equal weighted S&P. What makes that massive rally even more impressive—and more precarious—is that it was driven by just a handful of companies: seven tech juggernauts that literally move entire markets on their own.

This chart shows how market concentration has changed over the past 100 years. The S&P 500 today is the most concentrated it’s been since 1932—and that could be a major vulnerability in the stock market.

So, could the immensity of the Mag 7 break the stock market, or will it continue to drive the stock market even higher? That’s what we’ll explore in this video.

Past performance isn’t a reliable indicator of future results.

These companies are known as the Magnificent 7. They’re Apple, Amazon, Alphabet, Meta, Microsoft, Tesla and Nvidia. Together, they make up 32% of the entire S&P 500. These companies have driven this historic rally on the S&P 500 since 2023 with their strong fundamentals and high profits.

But they also contributed in a big way to the near bear market earlier this year after the tariff announcement. When those giant companies are weakened, they can take the rest of the market with them—like we’ve seen recently.

How vulnerable are the Mag 7 companies to Trump’s tariffs?

And what might happen when the pause on the tariffs is lifted?

First, let’s look at what makes the Mag 7 so vulnerable to tariffs and what that could mean for these companies as the trade war continues to play out.

Taken as a whole, the Mag 7 is very sensitive to tariffs because they are exposed to foreign markets in terms of manufacturing and revenue. Every Mag 7 company has manufacturing and sales ties to foreign countries—primarily China, Vietnam, India and South Korea. In fact, around three-quarters of the Mag 7’s suppliers are overseas, and five out of seven of these companies earn the majority of their revenue from abroad.

But the biggest threat comes from the trade war between the US and China, because China is unsurprisingly where these companies have the deepest ties. For example, up to 90% of Apple’s iPhones are currently made in China, and the US has slapped a 145% tariff on imports from China. If tariffs do go into effect on smartphones from China, the cost of producing iPhones could jump by hundreds of dollars, and Apple could see a 20 to 40% dip in earnings—which would weigh heavily on its stock price. Apple’s stock has already taken a big hit this year and is down over 20% from last year’s highs.

Tesla is another Mag 7 company with heavy exposure in China. The electric car behemoth has a gigafactory in Shanghai where it produces vehicles for the domestic market and for export. While Tesla hasn’t been hit as hard as other car manufacturers thanks to their relatively domesticated supply chains, Musk has said Tesla is not immune to the tariffs—and the company’s bottom line has taken a hit.

Despite the Model Y already being the most American car produced largely in the US, 30 to 40% of Tesla’s car parts are still sourced from abroad. That alone makes their pricing exposed to the effects of tariffs.

Read more: Trading Tesla after its earnings miss

And then look at Nvidia. The chip giant has deep ties to Taiwan, where its US-designed chips are manufactured. Trump’s Liberation Day tariffs included a 32% levy on imports from Taiwan, and that would impact Nvidia. Shortly after, though, Trump announced a tariff exemption for chips—which seems to have saved Nvidia from the worst of it.

The flip side is that tariffs go both ways. So, many of these other countries will hit back with their own tariffs. This could take a big hit on revenue for companies with foreign market share.

Let’s look at Nvidia again. Up to 30% of its revenue is tied to demand from China. So, reciprocal Chinese tariffs would make these chips more expensive and reduce demand, cutting into Nvidia’s profit margins.

And Nvidia isn’t alone. Take Apple—China accounts for 20% of its total revenue. Tariffs and other restrictions could make a major dent in Apple’s balance sheet.

The Magnificent 7 also has some strengths that make some of these companies resilient to tariffs

Some of them have a heavy domestic revenue base. Amazon leads with around 70% of its revenue coming from North America, and Microsoft earns more than half of its revenue from the US. That gives these companies a leg up when it comes to weathering tariffs and maintaining healthy profits.

It’s not just where these companies are making sales that matters—but also what they’re selling. Tariffs mostly affect hardware, chips, iPhones and physical products. But many of these companies primarily trade in software and services—which are not usually subject to trade barriers.

For example, look at Amazon. More than half of its revenue comes from Amazon Web Services, giving them a significant cushion against tariffs. Cloud services like Microsoft Azure and Google Cloud also bring in significant revenues without being subject to tariffs.

As for Meta, ads provide 99% of the social media company’s revenue, and ads are not affected by tariffs—at least not directly. But Meta could be indirectly exposed to tariffs. This could in turn make a significant dent in Meta’s earnings.

Lastly, most of the Magnificent 7 companies have massive cash reserves and margins to lean on when times get tight.

Looking ahead, this means that as the tariff pause comes to an end, Mag 7 companies stand to take a big hit—and bring the market down with them. But they’re also well positioned to weather the storm in the grand scheme of things, and they’re already making big moves to insulate their profit margins from the disruptive and unpredictable nature of the trade war, which shows no sign of slowing down.

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