Valeria, great to see you. Thank you very much indeed for for joining us today. We're here today to talk about the Magnificent Seven, those 7 large tech related companies in the US that have been a bit of a theme of, of markets over the last few years and have been coined the Magnificent Seven by market commentators. So perhaps you can begin by explaining what it is these companies have in common. Why have they been grouped together like this?
Absolutely. The Magnificent Seven, also known as the Mag 7, are a group of 7 tech titans that have shaped technology of late and the way enterprises and society operates. What they have in common, first of all, a very large market capitalization reaching, about 3,000,000,000,000 US dollars for Microsoft. And that is also reflected by a large market share in the respective end markets where they they operate, and global reach through, operating system or mobile devices. Take Apple for example.
Their active base is of, 2,200,000,000, active devices, which is amazing as testimonial of the investments they they have done and their global reach they, have achieved. And, most of all, what's fascinating is the ability that those titans have had to innovate and innovate at scale, reinforcing their competitive advantage in a virtual circle.
And and and are these companies all as magnificent as each other? I know that just year to date, we've seen NVIDIA's share price continue to appreciate quite significantly, whereas Tesla's has has sold off. How do we discern between the companies in this group?
Absolutely. Great point. In fact, they are unique and exposed to different end markets and their their respective growth drivers. Take take Tesla, for example, that you mentioned. They are exposed to electric vehicles, and penetration of electric vehicles has been amazing in the last 3 years, and probably is continuing to do so in the medium and long term.
However, in the short term, there is volatility in different forces, and what's happening as the expansion into the mass market increases that affects pricing and then margins, and and so the the share price. So that is a temporary factor. Nvidia, on the other hand, is enjoying strong momentum, which is supported by the demand from their clients, the like of Microsoft and and Alphabet, which are demanding NVIDIA's products in the, graphic processing units that are behind the large learning, models. And also supply demand is in their favor at the moment. However, volatility can happen suddenly in technology.
So this something we need to monitor and we do monitor every day.
Indeed. And on that theme of volatility, is this in any way reminiscent of the dot com bubble, for example, at the turn of the century where those early Internet stocks saw their share price appreciate significantly before the bubble burst? And it led to a very difficult period, not just for those companies, but for equity markets in general for a for a couple of years. Should we be concerned on that front at all?
Indeed. That's a great point. We always think of the dot com bubble that burst, in the spring of the year, 2,000 with drastic consequences later on. We are at different, situation right now. In fact, looking back, those companies were very mature, the very early stages of their development of the Internet development.
Often, they were unprofitable, and the, market was also structurally very mature with a high level of competition. On the contrary, at the moment, the market is is stronger with those companies having a strong competitive advantage and market position, a high level of of consolidation, so structurally more mature. Valuation, on the contrary, at the time of the dotcom bubble were crazy, where companies were valued at a 150 times earnings, which with hindsight is crazy, or if not profitable, parameters such as clicks were being taken in consideration, also a little bit out of reality. And, currently, the situation is more defensive and balanced. But we do monitor valuation on a daily basis and volatility.
That's paramount.
Yes. Of course. Yeah. So so great. That it's perhaps a slightly less irrational backdrop today. But nevertheless, we've seen these companies share prices appreciate quite notably over a a fairly long period of time. How do you as an equity analyst go about discovering whether or not that can continue? And are there any stocks within this group that you're paying particularly close attention to at the moment?
Absolutely. As equity analysts, it is our job to run valuation, considering different metrics, and doing so often. We speak with management. We listen to their expectations, so we have an understanding of the next 12 months. And that also is backed up with the client's demand for capital investment, for example, that we all check.
And we also look at the supply and demand, which was in, NVIDIA's favorite, favor at the moment. So all of that, it's an art. We do it on a very regular basis. We do monitor volatility. And, I follow, for instance, Microsoft that, people are more familiar with, but also NVIDIA.
And you mentioned, yes, NVIDIA there. It's it's perhaps the one company within this group which isn't perhaps a a household name. Perhaps you could just explain a little bit about essentially what it is NVIDIA does and why the company has become quite so significant.
Absolutely. NVIDIA makes the graphic, processing units, which are chips or hardware that are sold together with software and and connectivity to NVIDIA's clients that are the like of Microsoft and Alphabet. And those clients invest in large learning models to support generative artificial intelligence as the demand for it expands. So Nvidia has built up a strong competitive advantage in this. They have a unique software with not only the hardware but also the software and the connectivity.
At the moment, the supply demand is in Nvidia's favor, which which is positive, but also what's amazing is that artificial intelligence is a revolution in in technology which is likely to be supportive for the medium and long term, and we have to see how it evolves and develops. What we also do is monitor every day the volatility, the news flow, and we update the situation. As in technology, this is paramount.
We shall we shall watch with interest. Valeria, thank you very much indeed.
Thank you.