The stock market in 2024 has been dominated by what are known as the Magnificent Seven which includes Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta and Tesla. With the S&P 500 up 26.5% in price as of the 26th of December, these stocks have enjoyed average year-to-date appreciation of 68%. While these are indeed fabulous companies, it is reasonable to ask whether they deserve an average trailing P/E of about 52 as compared to 30 for the S&P. In particular, after an 83% price increase, Tesla sells at a P/E of 126. The following graphic indicates that Tesla’s market value exceeds that of the next forty largest public automakers combined!
