NEW YORK, April 30 (Reuters) - The U.S. technology and growth stocks known as the "Magnificent Seven" have regained their footing somewhat after a steep slide, but a few weeks of growing valuations and a dimming earnings edge could make it harder for them to push Wall Street higher.

The stocks -- Apple, Microsoft, Nvidia, Alphabet, Amazon, Meta Platforms and Tesla -- have stumbled in 2025, dragging down the benchmark indexes they had lifted to record peaks the prior two years.

The highly valued shares had swooned as investor fears spiked about the economic fallout from President Donald Trump's tariffs. Gold actually replaced long "Magnificent 7" as the most crowded trade among fund managers in a BofA survey earlier this month, ceding that title in the monthly survey for the first time in two years.

The group has rebounded since Trump paused many of his heftiest tariffs on April 9. The seven stocks kept rallying along with the broader market in recent days amid some encouraging signs the trade war was easing. Earnings this week will test the strength of the bounce, with four of the group due to report: Microsoft and Facebook parent Meta on Wednesday, Apple and Amazon on Thursday.

"We're back to pricing in what might be better than worst-case scenarios where some trade deals get announced," said Art Hogan, chief market strategist at B Riley Wealth. "When you make that shift from de-risking your books to getting back in a risk-on attitude, that is going to show up first in all things technology and specifically the Mag Seven for sure."

Magnificent 7 stock performance in 2025

The group's 2025 struggles are a dramatic shift from the prior two years. The Magnificent Seven's stunning gains meant they were responsible for well over half of the S&P 500's 58% two-year return in 2023 and 2024.

Broadly speaking, the rest of S&P 500 has held up better this year than the seven megacaps. The Roundhill Magnificent Seven ETF -- which weighs the stocks evenly -- is down over 14% so far this year while the Defiance Large Cap ex-MAG 7 ETF, which provides exposure to the index excluding the group, is down roughly 1%.

Performance of MAGS ETF vs EXMAG ETF

Even after their declines, the stocks' massive market values mean they still hold significant sway over key indexes. For example, the seven stocks account for about 30% of the S&P 500's weight, down from about 34% at the start of the year, according to LSEG Datastream.

While other U.S. sectors can pick up some of the slack, "you can't just brush this off and say, without these stocks, don't worry," said Jay Woods, chief global strategist at Freedom Capital Markets. "The real leadership is in megacap growth, and if these leaders aren't growing ... it's not going to help us take a big leg higher."

One reason the Magnificent Seven overall has held appeal for investors is their earnings strength. But that advantage over other companies is narrowing.

In the first quarter of last year, the Magnificent Seven grew earnings by 52% from the prior year, while the gain for rest of the S&P 500 was just 1.3%, said Tajinder Dhillon, senior research analyst at LSEG. In the first quarter of 2025, the group's earnings are expected to rise 21.4% against 8.3% for the rest of the index.

Earnings expectations are "not quite as robust as they have been, but you are still getting a premium relative to the 493," said Jack Janasiewicz, lead portfolio strategist at Natixis Investment Managers Solutions.

Magnificent 7 earnings versus S&P 500 earnings

Of course, investors may prefer some of the megacap stocks over others. Tesla shares, down about 28% this year, have been hit the hardest. Meta and Microsoft have held up relatively better, down over 5% and 6%, respectively, in 2025.

Valuations also differ. Tesla, run by Trump ally Elon Musk, trades at a whopping 120 times forward 12-month earnings estimates, while Alphabet trades at a P/E ratio of 16.6, according to LSEG Datastream.

Valuations for the Magnificent 7

As a whole, the Magnificent Seven's median forward P/E ratio has fallen to 26.8 from 31.2 at the end of 2024, according to LSEG Datastream. The group's median P/E fell as low as 22.2 earlier this month. The overall P/E for the S&P 500 was recently at 20.

The Magnificent Seven is a "barometer" for risk appetite, Hogan said.

"As that preponderance of risk appetite increases, you're certainly going to see that manifest itself in rallies in the Mag Seven," Hogan said.