The Magnificent Seven Fracture: AI Winners Pull Ahead as Lagging Stocks Crumble

The so-called 'Magnificent Seven' tech stocks are no longer moving in lockstep—AI performance is now the great divider.

Winners surge, losers get left behind

Forget the old gang mentality. The AI gold rush has reshuffled the deck, with companies leveraging artificial intelligence effectively seeing their valuations detach from the pack. Meanwhile, those failing to demonstrate concrete AI implementation are getting punished by increasingly skeptical investors.

The great tech divide of our time

What was once a cohesive group of high-flyers now shows cracks you could drive a blockchain through. The market's brutal efficiency at separating AI haves from have-nots makes previous tech sector corrections look like minor speed bumps.

As usual on Wall Street—the house always wins, even when the players change. Maybe that's why they call it 'artificial' intelligence.

Nvidia, Meta and Microsoft take the lead

Nvidia is leading the pack. Its stock has more than tripled in two years. It’s now the first company to hit a $4 trillion valuation, thanks to skyrocketing demand for its AI chips. Nvidia has basically outgrown the rest of the Magnificent Seven, moving in a completely different lane.

Meta and Microsoft aren’t far behind, as both now have a presence in AI and are being rewarded by investors.

Amazon, while not rallying quite like the others, still has its stock up 3% year to date, per data from CNBC. Tariff concerns have slowed things down for the Jeff Bezos-led company, but Amazon has invested in Anthropic, which helps its AI case a lot.

Now, everyone’s watching second-quarter earnings, with Alphabet and Tesla reporting later this week, and Meta, Microsoft, and Apple following shortly after.

Valuations are already sky-high. Six of the seven companies are trading above 25 times their projected earnings. By comparison, the S&P 500 average is 22.35. Alphabet is the only one priced below that.

Even with the performance gap widening, some investors think this split might not last. The companies lagging behind still have money, brand power, and plenty of time to course correct, or just buy their way back in.

But this wouldn’t be the first time a hyped group faded. FAANG (Facebook, Apple, Amazon, Netflix, and Google) once ruled Wall Street. That group collapsed in 2023.

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