Skip NavigationMarketsBusinessInvestingTechPolitics & PolicyVideoWatchlistInvesting Club
PRO
LivestreamMenuThe “Magnificent Seven” is no longer a monolith. The high-flying tech stocks that congealed into a single investment thesis representing the first phase of the artificial intelligence trade are differentiating in a major way. More tellingly, the group is now underperforming the market as a whole. In 2026, the S & P 500 is up about 9%, while the group is down 1% in that time, according to an analysis this week from asset manager Vanguard. Meanwhile, a more diverse group of infrastructure builders, energy companies and chipmakers has stolen the thunder of the AI trade in the past few months. The Vanguard analysis identified 45 companies within a broader “AI complex” that has doubled in value since the beginning of the year. Notably, that excludes Alphabet, Amazon, Meta Platforms, Microsoft and Oracle. “Investors are rotating away from large-cap tech and into companies that produce the physical components and infrastructure that are in high demand,” Shaan Raithatha, an economist with Vanguard, wrote to clients this week. Like “FAANG” before it — the acronym used for Facebook, Amazon, Apple, Netflix and Google — the Mag 7 may be disintegrating as a concept, and fissures are appearing between companies even as some of their business models are converging through so many circular supply chain investments. Four hyperscalers at the heart of the group – Microsoft , Meta , Alphabet and Amazon – are all developing their own AI hardware while investing in or potentially partnering with AI software makers. While their capital investments have been driving the AI boom in the stock market as a whole, investors are making increasingly stark distinctions among them. Meta stock fell this week after the company boosted its spending forecast again and analysts expressed confusion at the fact that the company is simultaneously buying and making moves to sell its excess computing power. “In terms of the number of offers to monetize your compute externally, you also at the same time are purchasing capacity from a number of third parties. I just hope you can help us understand some of the differences here,” Doug Anmuth at JPMorgan asked Meta CEO Mark Zuckerberg on Wednesday evening’s earnings call. META 5D mountain META 5-day chart Microsoft, on the other hand, surged after it reported Azure cloud growth of 43% and an unchanged capex forecast, showing increased returns on its AI investment. Microsoft stock is up 4.8% over the past six months, according to FactSet data. Alphabet missed on earnings-per-share in the second quarter while boosting its 2026 capex forecast by $15 billion. Amazon also hiked its capex projection by $20 billion on Thursday , though investors were happy this week about the company’s margin expansion in its AWS cloud sector. The remaining Mag 7 members — Apple, Nvidia and Tesla — are also telling increasingly different stories. AAPL TSLA,NVDA 6M mountain AAPL, TSLA, NVDA in past six months Shares of Apple, which faced criticism early on for sitting on the sidelines of the AI buildout, are up 16.4% over the past six months, though they fell were down almost 10% on Friday on input cost concerns amid the ongoing memory crunch. Tesla stock is down 27% over the past six months. The company’s free cash flow slipped into negative territory in the second quarter . Nvidia is up about 3.6% over the same time horizon. The dominant AI chipmaker is seeing more entrants into the GPU space, which complicates its business model, especially as some of those rivals are its own cloud customers. “Some of our customers are developing their own ASICs and other products, including designs optimized for certain workloads that may not require all of the features and functionality our data center systems provide,” the company acknowledged in its latest quarterly filing from May.
About The Author
