The story of the Magnificent Seven driving global markets has taken a sharp turn. These tech titans, once moving in lockstep, are now pulling in different directions. The artificial intelligence trade that tightly bound their fortunes is coming apart at the seams.
The Band Breaks Up
Investors have stopped grouping the market's biggest technology stocks together as a single unit. What was once Wall Street's favorite band of megacap names has seen its members' fortunes diverge sharply over the past year. Both professional money managers and ordinary investors are taking a much more cautious view of the AI spending boom.
Only two companies from the original seven managed to outperform the S&P 500 in 2025: Alphabet and Nvidia. So far this year, the picture looks even more fragmented, with five of the Magnificent Seven stocks performing worse than broader market benchmarks.
"The correlation has fallen apart completely," said David Bahnsen, chief investment officer at Bahnsen Group. "What they really have in common now is simply being trillion-dollar companies. The shared destiny is gone."
Selective Bets Replace Blanket Enthusiasm
This divergence signals how the AI investment landscape has evolved since the bull market began. Traders are now placing their bets much more selectively than before. Some expect artificial intelligence benefits to spread to industries like healthcare and manufacturing. Others are doubling down specifically on chip makers or the energy companies needed to power AI infrastructure.
"You're starting to see the AI trade broaden out significantly," observed Michael Hartnett, the Bank of America strategist who originally coined the Magnificent Seven moniker back in 2023. "The next Magnificent Seven will be those megacap companies who can demonstrate that AI adoption is genuinely transforming their massive businesses. Remember, in the classic western film that inspired the name, only a few gunfighters actually survived."
Retail Investors Look Elsewhere
Individual investors, many of whom were once loyal Magnificent Seven shareholders, have started turning their attention to other market opportunities. According to data from Vanda Research, retail investors accounted for a significantly smaller proportion of overall trading volume in those seven stocks last year compared to 2023 or 2024.
Tesla, a longtime favorite of ordinary investors, has seen the most dramatic decline in retail activity. Average daily retail turnover dropped 43% in 2025 from the peak investor interest recorded two years earlier.
The AI Arms Race Creates Divisions
Hartnett explained that he initially grouped these stocks together based on their shared characteristics as huge, well-run companies dominating the technology sector. But the AI arms race has been driving a wedge between members of the Magnificent Seven for some time now.
Amazon, Alphabet, Microsoft and Meta have emerged as the "hyperscalers" spending hundreds of billions to train new AI models, build data centers, and expand cloud-computing capacity. Nvidia continues to dominate the market for the advanced chips needed to power the most sophisticated AI systems.
Meanwhile, other members are clearly lagging behind. Apple shares trailed the S&P 500 index last year as the iPhone maker faced criticism for spending less and losing ground to competitors in AI development. Tesla stock, once a market highflier, has vastly underperformed several of its Magnificent Seven peers as electric vehicle sales growth has slowed considerably.
"They're all at completely different stages of the AI journey," said Michael Arone, chief investment strategist at State Street Investment Management. "The rising tide lifted all boats initially, but now we're getting to the point where we'll see clear winners and losers emerge."
Still Giants, But Marching Separately
Despite heading in different directions, each Magnificent Seven company still wields enormous influence over the broader market. Together, they comprise roughly 36% of the S&P 500's total market capitalization, according to Dow Jones Market Data. Their sheer size means their individual movements continue to shape market sentiment and performance.
Wall Street's History of Group Nicknames
Wall Street has a long history of creating catchy nicknames and acronyms for stock groups that eventually fall out of fashion. There was the Nifty Fifty in the late 1960s, BRIC for emerging markets (Brazil, Russia, India, China), and WATCH for major retailers (Walmart, Amazon, Target, Costco, Home Depot).
More recently, we've seen BAT (China's Baidu, Alibaba, Tencent), FANG (Facebook, Amazon, Netflix, Google's parent Alphabet), FAANG (the same group plus Apple), and Granolas (11 major European companies including GSK, Roche and Novo Nordisk). Each grouping eventually lost relevance as market dynamics shifted.
The Magnificent Seven may have lost the fundamental reason investors originally linked them together. But for now, no other posse of stocks has emerged to take their place as market leaders.
"There isn't a suitable replacement yet," Arone acknowledged. "But I think there probably will be eventually. Markets always find new narratives and new groupings that capture investor imagination."
The era of the Magnificent Seven moving as one unified force appears to be over. What comes next remains uncertain, but the AI investment landscape has undoubtedly entered a new, more selective phase where individual company execution matters far more than group membership.
