MAGS' Magnificent May: Mazza Says ‘Breadth Of Rally Stood Out' - Apple (NASDAQ:AAPL), Amazon.com (NASDAQ:AMZN)

The Magnificent Seven did not disappoint in May, posting a record-breaking $1.75 trillion in collective market cap gain, their strongest combined performance in years.

The center of the mania: the Roundhill Magnificent Seven ETF MAGS, which saw its best monthly performance since inception, powered by an AI-driven, earnings-supported technology surge.

But with valuations sky-high and Apple AAPL in reverse gear, is this still a time to buy, or has the market become too magnificent for its own good?

Benzinga spoke to David Mazza, CEO of Roundhill Investments, to discuss the factors behind MAGS’ “best month since inception” and whether the ETF’s star status still shines through in changing macro winds.

Broad-Based Gains, Not Just A One-Stock Show

“What stood out was the breadth of the rally,” Mazza said in an interview with Benzinga. “Nvidia NVDA led with a 24% gain, but Tesla TSLA, Meta META, Microsoft MSFT, Amazon AMZN, and Alphabet GOOGL also posted double-digit gains, signaling a broad-based resurgence in the mega caps.”

The tailwind, Mazza said, was fueled by easing trade tensions and healthy earnings, especially in AI and cloud. “While we anticipated strength from these companies, the magnitude and breadth of the rally exceeded expectations.”

Nvidia contributed alone with $639 billion worth of market cap, while Tesla and Meta were not far behind. Microsoft added $484 billion, Amazon increased by $219 billion, and Alphabet added $152 billion.

Also Read: Wedbush Launches AI Revolution ETF Backed By Dan Ives’ Proprietary Tech Picks

Apple Lags Behind, But MAGS Remains Firm

The sole laggard among the gang was Apple, which dropped 6%, erasing $192 billion in market capitalization and significantly underperforming the S&P 500. Nevertheless, MAGS’ equal-weighting approach prevented the decline from derailing the ETF’s performance.

“Apple’s underperformance, influenced by trade tensions and delayed AI initiatives, presents a potential buying opportunity,” Mazza said, highlighting the stock’s solid ecosystem and diversified manufacturing strategy.

Why The Magnificent Seven Still Matter

More than mere tech giants, Mazza views the Magnificent Seven as critical plumbing to the economy of today. These firms drive everything from cloud computing to e-commerce, he said. “MAGS focuses exclusively on these companies, providing targeted exposure to the core drivers of modern economic growth.”

As opposed to the broad tech ETFs that encompass legacy or cyclical names, MAGS is laser-like. And while volatility clouds traditional sectors, some analysts, including Goldman Sachs, have referred to these mega-caps as a “defensive growth proxy.”

Mazza does too.

“These companies combine strong growth prospects with resilient business models, making them attractive during uncertain times. Goldman Sachs’ characterization of them as a ‘defensive growth proxy’ aligns with our view,” he agreed.

The Question Of Valuation: Bubble Or Justified?

With the Magnificent Seven's forward P/E ratio now pushing 27.4x, the ghost of the dot-com bubble inevitably enters the chat. But Mazza sees a key difference.

"While the group’s median forward P/E ratio has risen to around 27x, it’s important to note that these valuations are supported by substantial earnings growth and strong fundamentals," he said. "Unlike the dot-com era, these companies are profitable and generate significant cash flow," Mazza noted. Nvidia, for example, posted a 69% YoY revenue jump last quarter.

Earnings Outlook And The AI Edge

Mazza is also optimistic about earnings, citing the group’s leading position in AI, cloud, and digital services. “Given their central roles in AI, cloud computing, and digital services, we anticipate continued earnings momentum as demand for these technologies persists and expands across various sectors.”

While MAGS provides exposure to high-cap AI adopters, Roundhill also has the CHAT ETF available for investors wanting more focused plays on Generative AI.

“We view AI as a transformative force with long-term implications. The companies within MAGS are not only early adopters, but also key enablers of AI technologies,” Mazza clarified.

What’s Next For MAGS?

Even with the monster rally, Mazza dampens expectations for the remainder of 2025.

“We don't expect a repeat of the massive gains we saw in the past year, but that doesn't mean the story is over,” he conceded. “If earnings growth remains solid and rate expectations stay in check, MAGS could still deliver compelling returns, just more measured than the blockbuster runs we’ve recently witnessed.”

With the market still characterized by uncertainty, Mazza feels that Magnificent Seven’s growth, quality, and macro sensitivity are an elusive combination.

These companies are essential to enterprise and consumer activity,” he said. “And MAGS is built to give investors direct exposure to that durability.”

Bottom Line

May might have been magnificent, but the future of MAGS will be more measured, not muted. For those who want a high-conviction wager on AI, cloud, and the core players in the digital economy, Mazza makes the case the ETF is a singularly focused yet compelling entry point.

After all, in a world short on clarity, the Magnificent Seven might just be the market’s most down-to-earth stars.

Read Next: