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The “Magnificent Seven” tech giants, once seen as a unified force driving the stock market, are beginning to chart separate courses, especially when it comes to artificial intelligence. While they’re not entirely breaking up, their diverging stock performances suggest that not all are advancing at the same pace in the AI race, The Wall Street Journal reported Sunday.
The group — Amazon (NASDAQ:AMZN), Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL), Apple (NASDAQ:AAPL), Meta (NASDAQ:META), Microsoft (NASDAQ:MSFT), Nvidia (NASDAQ:NVDA) and Tesla (NASDAQ:TSLA) — has commanded investor attention thanks to their technological influence and heavy weighting in the S&P 500 (SP500).
But in 2025, that cohesion has frayed. Nvidia (NASDAQ:NVDA), Meta (NASDAQ:META) and Microsoft (NASDAQ:MSFT) have surged more than 20% each, while Apple (NASDAQ:AAPL) and Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL) are in the red, down 16% and 2%, respectively. All seven are expected to report quarterly earnings soon, with Alphabet (GOOG) (GOOGL) and Tesla (NASDAQ:TSLA) leading off on Wednesday.
Jamie Cox of Harris Financial said to the Journal that such divergence was bound to happen eventually, given the different sectors these companies operate in. The recent split is, in his view, the market finally recognizing distinct winners and laggards.
Despite the divergence, the group still holds significant sway. They played a major role in both the market’s April downturn and its subsequent rally. According to Dow Jones Market Data, the Magnificent Seven now make up roughly 35% of the S&P 500 (SP500), a figure unlikely to change dramatically anytime soon.
Bank of America strategist Michael Hartnett, who coined the “Magnificent Seven” term in 2023, said the group originally gained that label due to their shared leadership in AI innovation.
Apple’s AI efforts questioned
Yet Ivana Delevska, CIO at Spear, pointed out that the fundamental performance of these firms is starting to diverge meaningfully.
Apple’s (AAPL) AI push hasn’t gained investor confidence. The company unveiled its Apple Intelligence initiative last year with high expectations, but progress has been slower than anticipated. A revamped Siri may not debut until late 2026.
Wedbush’s Dan Ives painted an image of Apple (AAPL) sitting on the sidelines, watching as the AI revolution speeds by.
Alphabet (GOOG) (GOOGL), meanwhile, is navigating both regulatory hurdles in the United States and Europe and rising anxiety that AI tools like ChatGPT could undercut its search business. Still, some analysts remain optimistic. With its vast data resources and increasing adoption of Gemini AI and AI-generated summaries in search results, Alphabet could yet regain momentum. Jeff McClean, CEO of Solidarity Wealth, expressed confidence that any perceived AI stumbles by Google (GOOG) (GOOGL) would eventually be corrected.
Tesla (TSLA), down 18% this year, is contending with falling electric vehicle sales and controversy tied to Elon Musk’s political activity. Musk has repositioned Tesla (TSLA) as more than a car company, angling it toward robotics and AI. He’s even proposed a shareholder vote on investing in his AI startup, xAI.
Tech’s AI ‘in crowd’
According to Ives, some members of the Magnificent Seven have lost their cool factor. He likened Apple (AAPL), Tesla (TSLA) and Alphabet (GOOG) (GOOGL) to being stuck at the “uncool” table while the AI frontrunners enjoy the spotlight.
That spotlight currently shines brightest on Nvidia (NVDA). Now valued at more than $4 trillion, the chipmaker has surged past its peers in the AI arms race. Its stock has more than tripled in two years.
Meta (META) and Microsoft (MSFT) have also benefited from the AI boom. Amazon (NASDAQ:AMZN), while up just 3% in 2024, has been affected by uncertainty around trade policies, though it has made a significant investment in AI startup Anthropic.
With quarterly earnings on deck, analysts will be closely watching whether these firms continue ramping up AI investments. That’s especially important given how richly valued they are: six of the seven trade at price-to-earnings ratios above 25, compared to the broader S&P 500’s (SP500) average of 22.35. Alphabet (GOOG) (GOOGL) is the lone exception.
Cox of Harris Financial remarked that it would take extremely strong earnings results to justify further gains at these valuations, something he’s not sure is realistic.
Still, projections for the group are robust. According to Morgan Stanley, the Magnificent Seven are expected to post 14% year-over-year earnings growth in the second quarter, far outpacing the rest of the S&P 500 (SP500), which is anticipated to show a 3% decline.
Some believe the current divergence may be a temporary phase. With substantial cash reserves and a strong foothold in AI, the lagging companies could eventually close the gap.
Ives suggested the Magnificent Seven may yet reunite, if they can successfully navigate the evolving AI landscape, the Journal reported.
The tech stock spotlight once belonged to the FAANG group — Facebook (META), Apple (AAPL), Amazon (AMZN), Netflix (NASDAQ:NFLX) and Google (GOOG) (GOOGL) — until its relevance faded in 2023. If these seven continue to drift in different directions, investors may soon look to crown a new collection of market leaders, leaving the Magnificent Seven behind.