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An exchange-traded fund holding the S&P 500 minus those seven names is outperforming the Magnificent Seven group by nearly 17 percentage points this year.
The Roundhill Magnificent Seven ETF (BATS:MAGS) plunged 4.63% on Thursday in its worst single-day drop in 15 months, as aggressive capital spending on artificial intelligence severely pressured big tech balance sheets amid a decline in dividends and buybacks.
Investors have largely shifted their attention away from the Magnificent 7 companies as enthusiasm has moved toward semiconductor stocks and the broader artificial intelligence trade. The Roundhill Magnificent 7 ETF (MAGS) has gained just 0.68% this year, significantly underperforming the S&P 500 and Nasdaq 100 indices.
The Roundhill Magnificent Seven ETF (NYSEARCA:MAGS) exists to solve a specific problem: getting equal, concentrated exposure to the seven mega-cap stocks that have dominated US equity returns since the AI cycle began.
Markets are embracing the idea that we are in an AI supercycle. Investors are betting on a multi-decade technological shift, similar to the internet, that will transform industries, computing, and infrastructure.
Q2 earnings are off to a strong start. Tech, Energy, Materials, Finance and Aerospace ETFs could shine as profit growth broadens across sectors.
AI spending is boosting chipmakers' cash flows before Big Tech sees returns, keeping semiconductor ETFs like SMH, XLK and DRAM in focus.
Big tech hyperscalers like Amazon, Alphabet, Microsoft, and Meta are positioned for significant free cash flow growth as CapEx investments begin to yield returns post-2028. Semiconductor and memory stocks have led the market, but expectations are now high, making risk-to-reward more attractive in hyperscalers and select software names.
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Transcripts source: company-published earnings calls. Speaker attribution and formatting are processed in-app.