By Philip van Doorn
This group was first identified by Jefferies in September 2020 and included Nvidia long before the company’s growth explosion began
Investors, analysts and the financial media enjoy coming up with new nicknames or acronyms for groups of dominant stocks. But the “Sweet 16” – identified by analysts at Jefferies in September 2020 and unchanged since then – is worth a closer look in light of the group’s contribution to the U.S. stock market’s overall performance over the past five years and how much most members of the group are expected to increase revenue during 2025.
One of the most recent names for a group of dominant stocks is “BATMMAAN.” This group is made up of Broadcom Inc. (AVGO) and the “Magnificent Seven”: Apple Inc. (AAPL), Tesla Inc. (TSLA), Microsoft Corp. (MSFT), Meta Platforms Inc. (META), Amazon.com Inc. (AMZN), Alphabet Inc. (GOOGL) and Nvidia Corp. (NVDA).
Read: The ‘BATMMAAN’ stocks swooped to the market’s rescue in December. Will they keep climbing in 2025?
But these eight stocks were also included in Jefferies’ Sweet 16 list in September 2020, and there are several factors that make the expanded list fascinating. For example, the list included Nvidia long before that company’s revenue explosion tied to the new market for graphics processing units used for the development of generative artificial intelligence technology.
Nvidia’s rapid sequential increases in quarterly sales, starting with its fiscal quarter ending April 30, 2023. Its five-quarter run of triple-digit year-over-year increases in sales started in the fiscal quarter ended July 30, 2023.
This is not to say that the Sweet 16 have all been winners. It includes some dogs. Here is the list, sorted by total returns since the end of 2019 and with some additional information:
Source: FactSet Ticker Total Return since end of 2019 One-year return Forward P/E Forward P/E one year ago
Nvidia Corp. NVDA 2,292% 4.4% 32.3 24.4
Tesla Inc. TSLA 1,314% -2.3% 118.5 62.3
Broadcom Inc. AVGO 733% -1.4% 34.7 21.7
Apple Inc. AAPL 240% -3.3% 31.8 27.0
Meta Platforms Inc. Class A META 202% 5.5% 24.3 19.9
Alphabet Inc. Class A GOOGL 193% 3.3% 21.7 20.3
Microsoft Corp. MSFT 180% 0.2% 29.8 30.3
Advanced Micro Devices Inc. AMD 178% 5.4% 25.0 36.3
Netflix Inc. NFLX 172% -1.4% 36.8 29.7
Amazon.com Inc. AMZN 140% 1.2% 35.4 39.6
Qualcomm Inc. QCOM 103% 4.5% 13.9 14.1
Fiserv Inc. FI 76% -0.8% 19.9 15.4
Texas Instruments Inc. TXN 72% 2.5% 32.9 25.5
Adobe Inc. ADBE 28% -5.0% 20.4 31.1
PayPal Holdings Inc. PYPL -19% 3.1% 17.9 10.8
Intel Corp. INTC -62% -0.2% 20.4 24.6
Soure: FactSet
All returns in this article include reinvested dividends.
The list includes forward price-to-earnings ratios, based on rolling consensus 12-month earnings-per-share estimates among analysts polled by FactSet. The S&P 500’s weighted forward P/E ratio has increased to 21.9 from 19.4 over the past year. Most P/E ratios on the list are higher than that of the index, in part because they are expected to increase profits more quickly than the companies in the index as a whole.
Most of the 16 have higher P/E ratios than they did a year ago, with six exceptions. It is not surprising that P/E ratios have declined for Advanced Micro Devices Inc. (AMD), Adobe Inc. (ADBE) and especially Intel Corp. (INTC), since these are the only three stocks on the list that have gone down over the past year. But Microsoft, Amazon and Qualcomm Inc. (QCOM) have lower P/E ratios than they did a year ago, despite showing double-digit gains for their stocks. Amazon is especially notable, with its stock rising nearly 53% over the past year, while its P/E has declined to 35.4 from 39.6.
The Sweet 16’s weighted contribution to the S&P 500’s rise
The S&P 500 returned 98% from the end of 2019 through Tuesday, Jan. 7. Eleven of the Sweet 16 outperformed the index for that period.
Another way to measure the Sweet 16 stocks’ importance within the S&P 500 SPX is to weight the index and the stocks by their Dec. 31, 2019 market capitalization. At the end of 2019, the Sweet 16 made up 23% of the S&P 500’s market cap, according to data provided by FactSet. With this weighting (including Alphabet’s Class A and Class C shares, since both are included in the S&P 500), the 16 have contributed 55.7% of the S&P 500’s total return since the end of 2019.
Here is the list again, this time sorted by weighted contributions to the S&P 500’s return for that period:
Meta Platforms Inc. Class A Ticker Weighted contribution to S&P 500's return since end of 2019 Total Return since end of 2019 Dec. 31 2019 weighting within S&P 500
Nvidia Corp. NVDA 12.3% 2,292% 0.538%
Apple Inc. AAPL 11.7% 240% 4.876%
Microsoft Corp. MSFT 8.1% 180% 4.496%
Alphabet Inc. Class A GOOGL 6.2% 193% 3.210%
Amazon.com Inc. AMZN 4.8% 140% 3.439%
Meta Platforms Inc Class A META 3.7% 202% 1.846%
Tesla Inc. TSLA 3.7% 1,314% 0.282%
Broadcom Inc. AVGO 3.4% 733% 0.470%
Netflix Inc. NFLX 0.9% 172% 0.530%
Qualcomm Inc. QCOM 0.4% 103% 0.376%
Advanced Micro Devices Inc. AMD 0.3% 178% 0.191%
Texas Instruments Inc. TXN 0.3% 72% 0.448%
Fiserv Inc. FI 0.2% 76% 0.294%
Adobe Inc. ADBE 0.2% 28% 0.597%
PayPal Holdings Inc. PYPL -0.1% -19% 0.475%
Intel Corp. INTC -0.6% -62% 0.973%
Source: FactSet
If we add up the weighted contributions to the S&P 500’s total return from the end of 2019 only for the Magnificent Seven the total is 50.6%. If we tack on Broadcom to round out the BATMMAAN group, we come to a 54% contribution. So you might ask: Why bother with the Sweet 16? There is more than one answer to that question below.
A look ahead
In a note to clients on Sunday, Jefferies analyst Steven G. DeSanctis estimated that for 2025, the Sweet 16 would show an aggregate earnings increase of 21.5%, with a median increase of 15.8%. For the rest of the S&P 500, he estimated earnings would increase by 10.6%, with a median increase of 8%.
Here is a summary of expected increases for earnings per share and revenue for the Sweet 16 for calendar 2025 from calendar 2024, among analysts polled by FactSet. We are using calendar-year estimates as adjusted by FactSet for companies (such as Apple and Nvidia) whose fiscal years don’t match the calendar. The list is sorted by expected 2025 EPS growth for the Sweet 16, with the full S&P 500 at the bottom of the table:
Company Ticker Expected 2025 EPS change Expected 2025 revenue change
Intel Corp. INTC N/A 6.0%
Nvidia Corp. NVDA 52.6% 55.2%
Advanced Micro Devices Inc. AMD 52.3% 26.4%
Tesla Inc. TSLA 36.1% 17.5%
Broadcom Inc. AVGO 28.2% 18.2%
Amazon.com Inc. AMZN 21.5% 10.9%
Netflix Inc. NFLX 20.3% 12.5%
Apple Inc. AAPL 18.5% 6.2%
Fiserv Inc. FI 16.3% 8.6%
Texas Instruments Inc. TXN 14.0% 11.3%
Microsoft Corp. MSFT 13.2% 13.9%
Meta Platforms Inc. Class A META 12.0% 14.5%
Alphabet Inc. Class A GOOGL 12.0% 11.9%
Adobe Inc. ADBE 11.1% 9.4%
Qualcomm Inc. QCOM 9.6% 8.2%
PayPal Holdings Inc. PYPL 7.2% 5.6%
S&P 500 SPX 14.6% 5.6%
Source: FactSet
Nine of the Sweet 16 are expected to show more rapid EPS growth in 2025 than the full S&P 500, while all except PayPal (PYPL) are expected to show more rapid revenue growth than the full index. Intel tops the list because it is expected by analysts to swing to a profit of 97 cents a share in 2025 from a net loss of 14 cents a share in 2024.
Let’s end with a summary of analysts’ opinions about the Sweet 16. This time the list is sorted by percentage of “buy” or equivalent ratings among analysts polled by FactSet. You might need to scroll the table to see the right-most columns.
Meta Platforms Inc. Class A Ticker Share "buy" ratings Share neutral ratings Share "sell" ratings Jan. 7 price Cons. price target Implied 12-month upside potential
Microsoft Corp. MSFT 95% 5% 0% $422.37 $510.36 21%
Amazon.com Inc. AMZN 95% 4% 1% $222.11 $244.96 10%
Nvidia Corp. NVDA 92% 8% 0% $140.14 $173.18 24%
Broadcom Inc. AVGO 87% 13% 0% $228.64 $246.69 8%
Meta Platforms Inc Class A META 83% 14% 3% $617.89 $668.20 8%
Alphabet Inc. Class A GOOGL 80% 20% 0% $195.49 $212.29 9%
Fiserv Inc. FI 79% 18% 3% $203.82 $234.06 15%
Advanced Micro Devices Inc. AMD 78% 20% 2% $127.33 $181.23 42%
Adobe Inc. ADBE 68% 27% 5% $422.63 $574.90 36%
Apple Inc. AAPL 66% 26% 8% $242.21 $249.75 3%
Netflix Inc. NFLX 58% 35% 7% $879.19 $852.47 -3%
PayPal Holdings Inc. PYPL 55% 43% 2% $87.97 $95.31 8%
Qualcomm Inc. QCOM 53% 44% 3% $160.52 $201.57 26%
Tesla Inc. TSLA 45% 31% 24% $394.36 $309.34 -22%
Texas Instruments Inc. TXN 32% 55% 13% $192.21 $211.63 10%
Intel Corp. INTC 7% 78% 15% $20.01 $24.45 22%
Source: FactSet
Microsoft and Amazon are tied for the highest percentage of “buy” ratings, while analysts expect AMD to show the largest price increase over the next 12 months.