Experts say the recent plunge in Tesla stock threatens its standing among an elite group of companies that have fueled a surge in the U.S. market in recent years, while also fueling talk of replacing the electric car maker with artificial intelligence. .

The so-called "Big Seven"--AppleAAPL,MicrosoftMSFT, AmazonAZN, AlphabetGOOG, Meta PlatformsMETA,NvidiaNVDAand TeslaTSLA-- staged a rapid rally last year that pushed Wall Street to record highs.

The group's collective weight in the S&P 500 is 28.6%, up from 27.8% at the end of 2023. That's close to the highest weighting ever for the group's shares, according to LSEG data.

More than a dozen institutional investors told Reuters that Tesla's successor is likely to be a company that can monetize booming demand for artificial intelligence.

"This is a gorgeous 6," said Brandon Michael, senior investment analyst at ABC Funds.

"Tesla faces competition from Chinese electric car manufacturers, price cuts, shrinking profit margins and many other problems. Even Musk himself has said that the Dojo supercomputer is a long shot."

"If I had to put a seventh one in there, it would be Broadcom, which is the leader in custom chips and is driving the artificial intelligence revolution."

Tesla shares, down nearly 24% year to date, formed a "death cross" on Thursday, a sign some traders interpreted as portending more losses. A death cross occurs when the 50-day moving average falls below the 200-day moving average.

Weak demand due to high borrowing costs and reduced government subsidies, as well as price cuts in different regions, are among the challenges the electric vehicle pioneer is grappling with.

Apple (AAPL) is another laggard in the group, down 2.94% as of the last close. The company's shares fell 2.2% on Friday after it forecast lower iPhone sales (link) and an overall revenue target of $6 billion, below Wall Street expectations.

"What's changed now is that we've turned the calendar over to 2024, which is a 'show me' year," said Art Hogan, chief market strategist at B Riley Wealth. The capabilities of artificial intelligence also depend on their ability to monetize artificial intelligence.

Meanwhile, growing optimism around artificial intelligence has sent Nvidia shares up 31% this year and Microsoft up about 9%, pushing the U.S. chipmaker's hot indexSOXPushed to all-time highs.

In January, Apple was knocked out of the title of the world's most valuable company by Microsoft Corp. due to a lack of AI-related plans in its business model (link) and sluggish demand in China, which disappointed investors.

Meta Corp. paid a dividend for the first time (link), soaring 21% on Friday, hitting a record high; AmazonAZNFourth-quarter revenue exceeded (link) expectations, rising 6.6%.

Before the "Big Seven", investors also used terms such as "FANG". "FANG" originally referred to Facebook, Amazon, Netflix and Google, but later became "FAANG" to include Apple.

During the technology boom of the late 1990s, investors piled into the so-called "Four Horsemen" - Cisco Systems, Intel Corp., Dell Computer Corp. and Microsoft Corp.

Thomson ReutersM7/TSLA

Who is competing?

Chipmaker BroadcomAVGO), which ABC Funds' Michael sees as a major contender, has doubled in value in 2023, with traders betting that its recent acquisition of VMware will provide a boost.

Advanced Micro Devices (AMD)AMD) is another market darling, a close rival of Nvidia that makes chips for all the graphics processor units needed for artificial intelligence, and its market capitalization more than tripled in 2023.

Chris Beauchamp, chief market analyst at IG Group, said that while the chipmaker's market valuation pales in comparison to the electric car giants, it can stand out because it develops artificial intelligence. Another big beneficiary.

Most others say the group may only shrink to six members and a new slogan may emerge, with some already calling the smaller group the "Magnificent Six."