Magnificent 7 Trade Is Broken — Here’s Where Smart Investors Should Look Next

Rich Duprey

Sun, July 26, 2026 at 11:24 AM EDT 5 min read

Quick Read

• The MAGS ETF returned 158% since its April 2023 launch but has fallen 4% in 2026 while the S&P 500 gained 8%.

• Alphabet, Amazon, Meta, and Microsoft stand out for combining strong cash flows with AI monetization, while Tesla and Apple face steeper growth questions.

• Buying the Magnificent 7 as a single basket no longer makes sense, as each stock sits at a different stage of turning AI spending into profit.

• Don’t wait: the analyst who called NVIDIA in 2010 just revealed his top 10 AI stocks. See the full list FREE now.

The artificial intelligence boom reshaped the stock market faster than almost any investing trend in recent memory. When OpenAI released ChatGPT in late 2022, investors quickly realized AI wasn’t another speculative technology story — it was becoming the next computing platform. 

Capital flooded into the handful of companies with the chips, cloud infrastructure, software, and balance sheets needed to make AI a reality. Those seven companies — Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), Nvidia (NASDAQ:NVDA), Amazon (NASDAQ:AMZN), Alphabet (NASDAQ:GOOG), Meta Platforms (NASDAQ:META), and Tesla (NASDAQ:TSLA) — became known as the Magnificent 7. 

Yet the nickname wasn’t originally a compliment. It was a warning that just seven stocks were responsible for an outsized share of the S&P 500‘s gains. Three years later, the market has become much broader, leaving investors to decide whether buying the group as a whole still makes sense.

From Market Leadership to Market Laggard

The Roundhill Magnificent Seven ETF (NASDAQ:MAGS), launched in April 2023, captured the AI trade almost perfectly. The ETF has returned 158% since inception, nearly double the S&P 500’s roughly 80% gain over the same period. Investors who bought early were rewarded handsomely. Its recent performance, though, changes the story.

Don’t wait: the analyst who called NVIDIA in 2010 just revealed his top 10 AI stocks. See the full list FREE now.

The numbers show momentum has faded. MAGS still edges out the broader market over two years, but it has trailed over the past year and has fallen behind badly in 2026.

Ironically, the same concentration that fueled market gains has become a headwind. Investors no longer view AI as a single trade. Instead, they’re distinguishing between companies building AI infrastructure and those generating meaningful returns from the hundreds of billions of dollars being invested.