The ‘Mag 7’ Strategy: Mag 7 Stocks To Buy For Massive 2025 Profits

The Magnificent Seven stocks also known as the “Mag 7 stocks” are a group of the most influential companies in the U.S. stock market. This term has been popularized to describe a set of dominant high-growth stocks, particularly in the tech sector.

The Mag 7 stocks to buy include the following high return stocks:

1. Alphabet Inc. (GOOG)
2. Amazon Inc. (AMZN)
3. Apple Inc. (AAPL)        
4. Meta Platforms Inc. (META)    
5. Microsoft Corp. (MSFT)
6. NVIDIA Corp. (NVDA)
7. Tesla Inc. (TSLA)

These top investment stocks span across four sectors and 6 different industries: technology services, electronic technology, retail trade, and consumer durables. But these aren’t just any ordinary blue-chip stocks.

The ‘Mag 7’ trading strategy is a technical trading approach developed specifically to trade this elite group of companies. Why? Because the price action on these stocks is truly unique, requiring a specialized strategy to capture massive profits.

These magnificent stocks have been the best performing stocks, outperforming the broader stock market for years, and the strategy is designed to capitalize on their continued dominance in 2025 and beyond.

Are you ready to learn the secrets of the Mag 7 stock to buy and position yourself for massive gains in the year ahead?

If so, continue reading…

What’s one of the best stocks to invest in right now?

If you had to choose the most profitable stocks to buy, over the past five years, NVIDIA has led the pack with an impressive return of approximately 2,700%, closely followed by Tesla, which has had a robust performance with over a 1,200% gain.

For example, CNBC Magnificent 7 Index YTD return is more than 53.87% which shows that the returns are not evenly distributed as there are some outliers like NVIDIA stock.

The table below displays the performance of the Magnificent Seven stocks over the last six months, one year, and five years. As you can see, NVIDIA’s returns have been truly magnificent, making it one of the best stock market investments to consider adding to your portfolio right now.

Magnificent Seven Stock Performance (YTD, 1 year, 5 years)

Stock	YTD Performance (%)	1 Year (%)	5 Years (%)
Apple (AAPL)	17.44%	20.26%	249.31%
Microsoft (MSFT)	10.96%	12.88%	189.72%
Amazon (AMZN)	33.35%	41.49%	132.95%
Alphabet (GOOGL)	23.69%	27.82%	161.18%
Tesla (TSLA)	25.23%	31.07%	1,236.11%
Nvidia (NVDA)	186.76%	190.51%	2,694.86%
Meta (META)	57.01%	67.04%	184.85%

Data as of November 18, 2024

Now, let’s see the importance of having an effective stock trading strategy to maximize gains from these stocks. 

Mag 7 Trading Strategy Explained 

At its core, the Mag7 stock trading strategy focuses on fading the relative strength of one stock against another stock through a simple trading concept known as SMT divergence.

Mag 7 divergence represents a powerful trading signal when comparing price movements between related magnificent seven stocks within the same timeframe. This can be seen when two tech giants, like Microsoft and Apple, typically move together, but one forms a higher price while the other unexpectedly drops lower.

Mag 7 divergence helps traders identify potential trend reversal points by comparing price movements between these closely related tech stocks. Usually, the magnificent seven stocks move in harmony – when one tech leader makes a new high, other related companies in the group follow suit.

However, sometimes these tech giants start moving differently from each other. When Microsoft makes a new high but Apple fails to follow, or vice versa, that’s what we call a Mag 7 divergence.

How to Trade Mag 7 Divergence?

If two closely related Mag 7 stocks are retracing down together, but suddenly one stock makes a lower low (LL) and the other one fails to match the other’s new LL, that’s significant. This suggests the new lower low in one stock might be deceptive, and both stocks could be ready to change direction, offering a strategic entry point.

The Mag 7 trading strategy takes advantage of these unique price patterns, allowing traders to potentially profit from both the upside and downside movements of these market-leading stocks.

Let’s dive deeper into the practical application of the Mag 7 stock trading strategy. When looking at related pairs like NVIDIA and AMD, or Meta and Alphabet, understanding their correlation is crucial for spotting profitable opportunities.

Here are some key principles for trading Mag 7 stock divergence:

Step 1: Understanding Correlated Pairs

Within the Magnificent Seven, certain stocks show stronger correlations based on their business overlaps:

• Meta and Alphabet share strong ties through their advertising revenue streams.
• Microsoft and Amazon compete directly in cloud services, while Apple and Amazon dominate consumer technology.
• NVIDIA’s AI leadership often influences Tesla’s movements due to their autonomous driving connection.

Step 2: Identifying the Bullish Divergence Setup

Let’s break down a real scenario where a profitable divergence occurred:

Imagine Alphabet (GOOGL) is pulling back from its recent high of $191, making a series of lower lows: $155, then $144, showing apparent weakness. However, its correlated partner Meta (META) shows resilience by making higher lows during the same period at around $443

This divergence in price action presents a potential buying opportunity in Meta.

Why? 

Because when correlated stocks diverge this way, the stronger stock (Meta) often “pulls up” the weaker one (Alphabet). 

This divergence suggests Meta’s weakness might be temporary.

Step 3: Confirming the Setup 

To validate this bullish opportunity:

• Daily chart analysis
• Meta shows oversold RSI readings above 30
• Meta’s higher lows come with increasing volume (showing strength)

Step 4: Entry Strategy

Once the divergence is confirmed, look for these specific entry triggers in Meta:

1. A bullish candlestick pattern (like a hammer or bullish engulfing)
2. RSI beginning to turn up from oversold
3. Price holding above the previous day’s low

Optimal entry point: When Meta forms its first higher low after the series of lower lows, especially if this coincides with Alphabet making another higher low.

During this setup, many traders would be fearful of buying Meta as it shows weakness. However, the divergence in Alphabet provides the edge – it’s telling us the sector remains strong and Meta’s weakness is likely temporary. 

Mag 7 Stocks to Buy Now and in 2025

As we look toward 2025, the Mag 7 stocks to buy isn’t just about picking the winners, but timing your entries. Consider NVIDIA’s staggering 3,000% five-year return. This wasn’t just market speculation – it was driven by fundamental AI adoption that’s still in its early stages. The key is not to chase performance, but to strategically build positions during market-leading divergences.