Looking back at 2023, it's clear that the stock market was dominated by tech — but not just by the tech sector in general. It was dominated by seven specific tech companies.
The "Magnificent Seven" — Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla —
So when reviewing the top-performing tech funds of 2023, it's no surprise that the Seven's fingerprints are all over them. New data from Morningstar Direct shows that of the top 10 funds, nine have major holdings in at least one of the Magnificents.
"The so-called Magnificent Seven truly dominate their industries and almost define market returns," said Kashif Ahmed, president of
Many funds benefited from the success of that handful of companies. It was a major reason tech stocks dominated
But how long will it last? Already, some Wall Street analysts are seeing signs that 2024 will be less top-heavy. The second half of 2023 was much worse for the Magnificents than the first half — in fact, all seven companies
"Tech should continue to be in a very vibrant bull market in 2024, but it is one that will broaden out across the sector, and not just be confined to the top names," James Demmert, founder of
Another common factor for many of the top funds was semiconductors. Over the past decade, this technology has become crucial to modern electronics, from smartphones to satellite systems to medical devices — and, importantly for the future, AI. Of 2023's top 10 tech funds, eight had major holdings in at least one semiconductor company.
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"Semiconductors did exceptionally well because of the hoopla surrounding the latest Wall Street darling, AI," Ahmed said. "However, semiconductors are an essential component that go into so much of our daily lives, so they should be a good investment allocation for the foreseeable future."
Whatever the future holds for AI, and whether or not the Seven spread their wealth to the Many, wealth managers largely expect tech to stay magnificent in 2024.
"Since the tech sector reaches into so many sectors of the economy, it harvests its share of the prosperity in each of those sectors," said Robin Hovis, a financial advisor at
To see the 20 top-performing tech funds of 2023, scroll through the cardshow below. All data is from Morningstar Direct and is current as of Jan. 16, 2024.
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