2-minute read
Something weird is going on in the stock market. Something we’re not used to seeing.
What’s that?
You know how I’ve mentioned 213 times that 7 tech stocks have dominated the market for the past decade and a half? And how those Magnificent 7 tech stocks have accounted for most of the returns in the market?
Yeah, I recall.
Well here’s what those stocks are doing lately:
Magnificent 7 Stocks vs. Stock Market Trailing 3-months1 | |
Stock | Return |
Facebook (Meta) | -9.69% |
S&P 500 | -4.19% |
Nvidia | -3.25% |
Google (Alphabet) | -2.98% |
Tesla | -22.51% |
Apple | -9.16% |
Amazon | -9.11% |
Microsoft | -20.88% |
Microsoft is down over 20% over the last 3 months? Eesh.
Right! And only 1 of the 7 are beating the broader market. Compare that to 2024 when all but 1 beat the market and were up 30%+.
So what’s going on?[2]
$700 billion seems like a high number.
Keep in mind they spent 75% less - $170 billion – just 4 years ago.[3]
Global AI domination doesn’t come cheap, my friend.
There’s also this going on:
A wild debt binge fueling ambitions, eh? Sounds like my kind of party.
Investors are certainly hoping it leads to a good time.
What does that mean exactly?
Broadly speaking, Big Tech needs to show a return on their AI investment. They need to be able to point to revenue and profits directly tied to their “AI ambitions”.
How quickly do they need to do that?
Some analysts say as quickly as year-end. Expectations for these companies are always high, but historically high spending and debt financing have investors holding their feet to a raging fire.[4]
10 months to justify $700 billion in spending? Seems like a gargantuan task.
It is. And who knows if they’ll be able to or even if this year-end timeline is correct. The good news is…
There’s good news?
Yes, the good news is that there are more stocks to invest in aside from the Mag 7. There is a fund that tracks the S&P 493 which are all the companies in the S&P 500 excluding the Mag 7. Here’s how it compares to the Mag 7 fund so far this year:
Strategy | 2026 Year-to-Date Total Return[5] |
Ex-Mag 7 ETF (XMAG) | -1.51% |
Mag 7 ETF (MAGS) | -9.72% |
That’s encouraging at least.
You can also invest in international stocks. That index is up 2%.[6]
Any other suggestions?
Gold is up 8%, real estate is up 3%, and even boring bonds are up 0.25%.[7]
A couple more fish in the sea apparently.
Fortunately so. The Mag 7 are widely owned and still mean a considerable amount for the broader stock market. Whether they singlehandedly bring down the market one day is to be determined. Luckily, we’re not there yet!
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[1] December 20, 2025-March 20, 2026
[2] Source: https://www.cnbc.com/2026/02/06/google-microsoft-meta-amazon-ai-cash.html
[4] Nick Colas in: https://podcasts.apple.com/gy/podcast/big-tech-has-til-year-end-or-else/id1456467014?i=1000751084010
[5] Through March 19, 2026.
[6] FTSE Global All Cap ex US Index through March 19, 2026.
[7] Returns through March 19, 2026 represented by GLD, IYR, and AGG.