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Why are the Magnificent Seven, including Nvidia and Tesla, losing their Wall Street grip?
Nvidia, Apple, Amazon and Tesla are losing momentum as the Magnificent Seven face weaker returns, high valuations, huge AI costs and market risks.
The group known as the Magnificent Seven was once the biggest force on Wall Street. The group includes Nvidia, Apple, Amazon, Alphabet, Microsoft, Meta and Tesla. From 2015 to 2024, the seven stocks together gained a huge 698%, almost four times the return of the S&P 500. But their strong run has started to slow down in 2026.
In the first half of 2026, the Magnificent Seven fell 1% in value, even as the wider S&P 500 gained 9%, according to Vanguard. The seven stocks are also no longer moving together. Some are rising strongly, while others are falling.
As of August 18, Nvidia was up about 18% for the year. Apple was up about 14%, while Amazon gained about 13%. Alphabet was up around 10%, while Microsoft was almost flat for the year. Meta was down about 17%, while Tesla had fallen about 25%. This shows that the Magnificent Seven are no longer behaving like one powerful group.
“There’s only one Mag-7 that’s beating the market this year. It’s Nvidia,” said Chris Grisanti, chief market strategist at MAI Capital Management, according to USA Today. The S&P 500 is up roughly 12.5% this year, meaning Nvidia is the only Magnificent Seven stock that is clearly performing better than the broader market, Grisanti said. Grisanti said the Magnificent Seven had once moved together, but they are now “separating” as investors look at each company's problems and growth prospects differently.
How did the Magnificent Seven get their name?
The seven companies became some of the world's biggest companies by market value after years of huge growth. Bank of America analyst Michael Hartnett coined the term “Magnificent Seven” in 2023 to describe these seven major technology and growth companies.
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The name became popular because the seven stocks helped drive a major rally in the US stock market. But the companies are actually very different businesses. Amazon is mainly known for e-commerce and cloud computing. Alphabet owns Google and makes most of its money from areas such as online advertising and cloud services. Meta owns Facebook, Instagram and other social media platforms.
Microsoft makes software and also has a major cloud business. Tesla makes electric vehicles and is also developing businesses around energy, robotics and autonomous driving. Apple makes products such as the iPhone, Mac and other consumer devices. Nvidia makes chips that have become extremely important for artificial intelligence. Because their businesses are so different, investors are now questioning whether the “Magnificent Seven” label still makes sense. Grisanti said the term may now be more useful for looking at the past than for describing the market today.
Why are some Magnificent Seven stocks falling?
One major reason is that each company is now facing its own set of problems. Tesla has struggled after a difficult 2025, when CEO Elon Musk became heavily involved in politics as an adviser to President Donald Trump, according to USA Today. Tesla's stock has fallen sharply as investors have worried about the company, its leadership and its future growth.
Microsoft has also fallen this year as software stocks across Wall Street came under pressure. Meta has faced another major problem: legal pressure over allegations that its platforms contributed to addictive behaviour among children, according to USA Today. These company-specific problems have made it harder for all seven stocks to continue moving in the same direction.
Investors are questioning the huge AI spending
There is also a much bigger question hanging over the Magnificent Seven: Will all their massive spending on artificial intelligence actually make enough money? Alphabet, Amazon, Meta and Microsoft are often called AI hyperscalers because they are spending huge amounts to build AI infrastructure. Together, these four companies are expected to spend more than $700 billion on AI infrastructure this year, according to Yahoo Finance.
The companies are spending heavily on data centres, AI chips, electricity and other infrastructure needed to run powerful AI systems. But the spending is becoming extremely expensive. The companies are competing with each other for memory chips and electricity capacity needed to expand their AI operations. Rising demand has pushed up the prices of some of these key resources.
This has created another investment opportunity: instead of buying the biggest AI companies, some investors are putting money into the companies that supply them. Investors are also asking a simple question during company earnings calls: Will all this AI spending eventually produce enough profits? “At the end of the day, the bill will come due,” said Roger Aliaga-Díaz, global head of portfolio construction at Vanguard. Aliaga-Díaz said investors will increasingly want to know whether the huge amount of money being spent on AI will actually pay off, as cited by USA Today.
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Are the Magnificent Seven stocks too expensive?
Another problem is valuation. Some investors believe several Magnificent Seven stocks became too expensive after years of strong gains. Vanguard had already warned in 2025 that the Magnificent Seven could see only modest growth over the next decade. One reason is that several of the stocks were already trading at very high prices compared with their earnings.
Investors often use a measure called the cyclically adjusted price-to-earnings ratio, or CAPE, to judge whether the stock market is expensive or cheap. The CAPE ratio looks at stock prices compared with long-term company earnings. The CAPE ratio for the S&P 500 currently stands at about 42.35, according to Multpl. A high CAPE ratio suggests that stocks are expensive compared with their earnings.
Most of the Magnificent Seven also have higher price-to-earnings ratios than the wider market. This means investors are paying a higher price for the expected future growth of many of these companies. If that growth does not meet expectations, their stocks can face bigger falls.
How Magnificent Seven now controls a huge part of the S&P 500?
Another concern is market concentration. The seven companies together now make up around 34% of the total value of the S&P 500, according to a Motley Fool analysis. That is a huge jump from 2015, when the seven represented only about 12% of the S&P 500, according to USA Today. This means the US stock market has become much more dependent on a small number of very large companies.
“The US market overall has become very top-heavy,” said Philip Straehl, chief investment officer, Americas, at Morningstar Wealth. A market is considered concentrated when a small number of companies make up a very large share of its total value. This can become a problem if those companies suddenly fall because a large part of the wider market can fall with them.
Even investors who think they are diversified through an S&P 500 index fund are still heavily exposed to the Magnificent Seven. About one-third of an S&P 500 investment is effectively tied to these seven companies. “You’re buying into the S&P 500 to diversify, right? But you still end up with this very specific group,” said Anders Bylund, a contributing media and technology analyst at The Motley Fool.
Does this mean investors should leave the Magnificent Seven?
Analysts are not saying investors should sell all their Magnificent Seven stocks. Some of the companies still have strong businesses and long-term growth opportunities. The Motley Fool, for example, still lists Amazon, Alphabet and Apple among its top 10 stocks to buy and hold. The bigger point is that investors may no longer be able to treat all seven companies as one single trade.
Nvidia is showing strong growth because of the huge demand for AI chips. Apple and Amazon are also performing well this year, while Meta and Tesla have struggled much more. This growing gap between the companies suggests that investors are becoming more selective.
Where can investors look beyond the Magnificent Seven?
Value stocks are companies whose shares trade at relatively low prices compared with their sales and earnings. Vanguard expects value stocks to return around 6.4% to 8.4% a year over the next decade. Another option is small-cap stocks, which are shares of smaller companies. Vanguard expects small-cap stocks to return around 4.7% to 6.7% annually over the next 10 years.
Investors can also look at non-US stocks. Foreign stocks beat US stocks in 2025, according to USA Today, and some analysts continue to see international markets as attractive in 2026. The main idea is not to depend too heavily on a small group of giant US companies.
