The Magnificent Seven tech giants—Nvidia Corp., Alphabet Inc., Apple Inc., Microsoft Corp., Amazon.com Inc., Meta Platforms Inc., and Tesla Inc.—have lost their market dominance as the artificial intelligence trade shifts away from these behemoths toward memory chipmakers. While the Nasdaq 100 Index has surged 16% in 2026 and the S&P 500 has climbed 10%, an index tracking the Mag Seven has gained just 1.7%.
AI Trade Evolution Drives Rotation
Investors are now focusing on the biggest beneficiaries of the massive spending wave dedicated to building out AI infrastructure, while growing skeptical of the companies doing the spending. This has propelled memory chipmakers like Micron Technology Inc. and Sandisk Corp. to the top of the leaderboard, relegating the Mag Seven stocks to an afterthought. The Philadelphia Stock Exchange Semiconductor Index is up 73% in 2026, on pace for its best year since 2003 and coming off its best quarter ever.
“The Mag Seven used to be one of the only places you could go to reliably get earnings that were much better than the market,” said Brian Barbetta, co-head of Wellington Management’s technology team and co-portfolio manager on the global innovation strategy. “People are now more focused on reasons to not like them.”
Correlation Drops to Historic Lows
The decoupling of the Mag Seven from the broader market is evident in correlation data. In April, the Mag Seven’s 40-day correlation to the Nasdaq 100 peaked above 0.95, a near-perfect correlation. It recently dropped below 0.7, its lowest since 2017. Jessica Rabe, co-founder at DataTrek Research, noted in a June 30 client report that big tech and the S&P 500 “are moving together about as little as they were in 2015, when these names were only 10-11% of the index.”
Despite this shift, the seven tech giants still represent roughly 37% of the Nasdaq 100’s weight and almost a third of the S&P 500.
Memory Chipmakers Lead While Nvidia Lags
The AI trade has evolved to focus on new winners, notably memory and storage chipmakers, which are moving largely without Nvidia—the erstwhile AI bellwether. This year, Nvidia is the third-worst stock in the semiconductor benchmark with a paltry 4.9% gain. Among the remaining six Mag Seven stocks, performance is mixed: three are in the green, with Alphabet leading on perceptions it will emerge an AI winner. Microsoft, however, is down 20%, with June marking its worst month since 2000 due to concerns about aggressive AI spending and vulnerability to the technology as a software maker.
Investor Flows Reflect Rotation
Investors pulled US$786 million in June from the Roundhill Magnificent Seven ETF, the most on record, while pouring US$9.3 billion into the Roundhill Memory ETF, according to data compiled by Bloomberg. Deutsche Bank strategists wrote in a June 30 note that “positioning in large-cap tech was ‘extreme’ at the end of May” but has “now returned to a more neutral stance.”
The Mag Seven index rose 0.4% on Tuesday, but the broader trend signals a lasting shift in market dynamics as the AI trade spreads beyond the behemoths.
