If I had invested £1k in the 'Magnificent 7' of the stock market last year, this is what I would have now.

Over the past year, a group of US stocks have been driving the stock market. The group has been called the 'Magnificent 7', given the level of share prices and the number of stocks included. If I had invested £1k equally between different companies last year, here is what I would have right now.

Working well as a team

For reference, a basket is built Nvidia, Tesla, an apple, Amazon, Alphabets, Metaagain Microsoft. The profits of individual firms last year ranged from -17% from Tesla, to 179% for Nvidia. That's a huge range to deal with!

An equal split between all stocks means that my percentage return will be 48.5%. That means my £1,000 would currently be worth £1,485. That is an unattainable advantage considering that FTSE 100 increased by only 10% during the same period. Even with heavy technology Nasdaq The index rose 24%.

The key to take

One thing I quickly gathered is that diversity is the key to success. Even though seven stocks aren't enough to get 100% diversification, they certainly spread my risk around. For example, let's say that I had just chosen to buy one stock and went ahead Tesla (NASDAQ: TSLA). I would have lost it right now if that was the case.

Although the electric vehicle (EV) maker's share price has fluctuated significantly over the past year, the trend has been downward. The business posted disappointing investor reviews, both on delivery numbers and financials.

For example, the total number of deliveries in Q2 decreased by 4.8% compared to the same quarter last year. This may not seem like a lot, but by 2023 it was growing at an incredible rate. This makes it very interesting to consider.

With aggressive robotaxi rollouts being pushed back, and weak demand for the EV sector from China, the price has struggled to gain traction. However, Elon Musk's charismatic influence should not be underestimated. His ability to please shareholders and grow the company is a real asset Tesla should keep.

Next year

Of course, the risk of spreading my £1k is that I could miss out on huge gains again. I'd be fine if I just chose Nvidia and ignored the rest.

Looking ahead, I think Magnificent 7 restoration will be different. I believe Nvidia will still rally, but at a much slower pace than last year. Given the market cap and size of the firm, it is very unlikely that you will see another 179% move.

However, I think the team as a whole will continue to push forward. Companies like Apple and Alphabet clearly show how to monetize artificial intelligence. This includes the latest developer conference from Apple, which showcases new AI features on the iPhone. With AI at the forefront of innovation, stocks should continue to gain.

The biggest risk I see is the rush to safety for investors. If sentiment turns sour later in the year, these high-growth names may feel the full brunt of investor anxiety.