The '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.
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.
