The Magnificent Seven's stock market dominance may be waning, Goldman Sachs suggests in an otherwise optimistic 2025 forecast.

Why it matters: The seven tech stocks — Amazon, Apple, Google, Meta, Microsoft, Nvidia and Tesla — have played a huge role in the S&P 500's fabulous run over the past two years.

• But after big run-ups they are also, in Goldman's estimation, trading around fair value, meaning they will need to keep growing at outsized rates for shares to keep climbing.

By the numbers: The group of seven accounted for more than half of the 57% rise in the S&P 500 over the past two years. But year-over-year that outperformance gap has narrowed.

• In 2023, the seven stocks generated a 76.3% return, against a 13.8% return for the others, about a 63 percentage point difference.
• In 2024, so far, that "premium return" gap is 22 percentage points.
• In its 2025 U.S. equity outlook, Goldman expects that premium gap could be as small as 7 percentage points as earnings growth cools.

Between the lines: For a while, some on Wall Street have fretted over market concentration — the fact that a few colossal tech companies are dominating the S&P 500.

• A JPMorgan note earlier this year called the market "increasingly unhealthy."
• In a widely read recent note, Goldman's chief U.S. equity strategist David Kostin and his team wrote that episodes of highly concentrated markets don't last. He said something similar on a webinar with reporters yesterday.

What to watch: There are risks to the stock market heading into 2025. Perhaps the biggest wild card is the incoming presidential administration.

• Will Donald Trump's plans to cut corporate taxes and reduce regulations fuel growth? Or will mass deportations and tariffs fuel inflation, leading to interest rate hikes? (Goldman even called their 2025 equity outlook "The Art of the Deal," after Trump's 1987 book.)
• Yesterday, Kostin questioned the longevity of the AI boom — certainly the Magnificent Seven's rocket fuel.
• He also warned that a combination of fundamental factors suggest the market is "more vulnerable than normal" to significant drawdowns if there are any hiccups in the Magnificent Seven's growth.

The bottom line: Yesterday's earnings report from Magnificent Seven member and AI superstar Nvidia didn't present much in the way of hiccups.

• The company reported its latest quarterly profits more than doubled over the past year.
• Even so the stock fell a bit after-hours, CNBC reported, as the company's revenue growth forecast (+70% in the current quarter) wasn't quite as astronomical as recent quarters.

The stock market hasn't looked this top-heavy since the heyday of the so-called "Nifty Fifty" — a group of stocks that included Polaroid, Sears and Eastman-Kodak and that drove a bull market more than half a century ago.

By the numbers: The market value of the top 10 companies in the S&P 500 makes up nearly 37% of the index's total value, the highest since 1965.

Congress is embroiled in what's essentially a workplace fight over bathrooms that is pretty outside the norm in the private sector.

Why it matters: Most private companies have made efforts over the past decade or so to foster an inclusive environment for LGBTQ+ employees — that means adults can use the bathroom they feel most comfortable using.

Catch up quick: Republicans in the House of Representatives banned Congress' first-ever transgender member, incoming Rep. Sarah McBride (D-Del.), from using women's bathrooms.

The big picture: Though backlash over diversity, equity and inclusion (DEI) efforts has recently intensified, and companies have pulled back on their efforts, bathroom use isn't a controversial issue in Corporate America, says Joelle Emerson, the founder of Paradigm, a diversity consulting company.

Zoom in: "Most companies addressed this years ago. Gender neutral restrooms are a norm now, and in most companies, people use the bathroom that corresponds with their gender," Emerson says.

• She says her firm has worked with thousands of companies over the last decade, and she can't think of one that had an internal issue over the bathroom.
• Beyond just letting folks use the bathroom of their choice, 63% of companies in the Human Rights Campaign corporate equality index have listed workplace policies such as trans-inclusive restrooms and gender neutral dress codes for employees, per HRC's most recent report.
• In 2016, many companies pushed back aggressively and successfully against North Carolina's "bathroom bill," which would have restricted restroom access.

Reality check: Of course, the workplace is no utopia, nor is it free of discrimination for transgender workers.

• The backlash against DEI and transgender rights recently pushed some companies into silence and raised fears over a pullback in support. And the anti-trans sentiment only seems to be intensifying post-election.
• More recently, the business community has stayed quiet in response to a flurry of anti-trans legislation, as Axios reported last year.

On the horizon: Transgender employees who need to travel for work may need to use airports — government owned — that have anti-trans restrictions on restrooms.

• It's already an issue in Utah and a few other places with such laws on the books.

The bottom line: "There are real barriers to creating workplace cultures that work for everyone," Emerson says. The bathroom "just isn't one of them."