The US Magnificent Seven is becoming an irrelevant concept, according to Betashares senior investment strategist, Cameron Gleeson.
The group of seven is comprised of Apple Inc (NASDAQ: AAPL), Tesla Inc (NASDAQ: TSLA), NVIDIA Corp (NASDAQ: NVDA), Meta Platforms Inc (NASDAQ: META), Amazon.com, Inc. (NASDAQ: AMZN), Alphabet Inc (NASDAQ: GOOGL) (NASDAQ: GOOG), and Microsoft Corp (NASDAQ: MSFT) stocks.
For a long time, these seven soaring US stocks have made up about a third of the market capitalisation of the S&P 500 Index (SP: .INX).
For the past few years, they have delivered an outstanding performance, exhibiting impressive earnings growth and share price growth.
But Gleeson says times are changing.
Image source: Getty Images
Magnificent Seven losing significance: expert
Gleeson says the Magnificent Seven is losing significance because the seven stocks are no longer performing in tandem as a group.
In a new article, Gleeson writes:
… the Magnificent 7 stock prices are no longer acting like a homogeneous group.
The best performing company in this cohort is Nvidia, whose share price is up 28%.
Tesla's is down 14% as markets come to the realisation that its business model is fundamentally different to the other Mag 7 names.
Check out the Magnificent Seven's divergent share price performance during our Aussie FY25 (1 July 2024 – 30 June 2025).
One Mag 7 stock leapt 61% while two of them lost value over the 12 months.
What's happening with these companies?
Gleeson says Apple has lost touch with the pack after delays in rolling out artificial intelligence (AI) features that underwhelmed users.
He writes:
The company is under increasing pressure to make a big AI acquisition to catch up to others like Meta and Microsoft.
Gleeson says companies like semiconductor giant Broadcom (NASDAQ: AVGO), data analytics firm Palantir Technologies (NASDAQ: PLTR), and subscription streaming service Netflix (NASDAQ: NFLX) have started to take over market leadership from Apple and Tesla.
This is happening because investors are switching to companies that are displaying stronger evidence of AI-related earnings growth.
Gleeson says:
As with the development of any new technology, new leaders can be expected to emerge over time.
This decoupling comes as the NASDAQ-100 Index (ASX: NDX) outpaces the earnings growth of the Magnificent Seven stocks.
Nasdaq 100 outperforms Mag 7 on earnings
Gleeson says the Mag 7 stocks delivered more than 15% year-over-year earnings growth in 2Q 2025.
This compares to a faster rate of 16.9% for the rest of the Nasdaq 100.
Gleeson argues the AI narrative is now broader than the Magnificent Seven stocks.
He comments:
If AI can deliver a productivity dividend, and massive capex spend on AI data centres and infrastructure has a stimulatory effect, it will likely benefit the US economy as a whole, not just the hyperscalers.
Other macroeconomic tailwinds are also supporting this shift.
Gleeson notes that recent weakness in the US dollar is boosting reported earnings for all tech companies selling to buyers worldwide.
Netflix, which earned 56% of its revenue outside the US in 2024, is a relevant example.
Betashares believes the Nasdaq 100 is well-positioned in this new landscape.
In our view, AI, currency and earnings growth provide strong tailwinds for the NASDAQ 100.
With higher rates unlikely, the threat of trade sanctions and retaliatory measures lifted, plus support from the White House, our view is the NASDAQ 100 has significant potential upside from here.
Have you heard of ASX NDQ?
Betashares is the provider of the popular ASX exchange-traded fund (ETF) Betashares Nasdaq 100 ETF (ASX: NDQ).
Gleeson says the NDQ ETF offers diversified exposure beyond the Magnificent Seven and includes Broadcom, Netflix, and Palantir stocks.
