For about three years, the Magnificent Seven have been the leading indicators of the equity market rally. But as 2026 gets underway, their collective momentum appears to be fading, and the elite group of mega-cap tech stocks is now starting to act as a drag on the broader market rather than its engine.
From the start of the year through Jan. 14, five members of the Magnificent Seven sit in negative territory.
Nvidia Corp. (NASDAQ:NVDA), Apple Inc. (NASDAQ:AAPL), Microsoft Corp. (NYSE:MSFT), Meta Platforms Inc. (NASDAQ:META), and Tesla Inc. (NASDAQ:TSLA) have all slipped.
Only Alphabet Inc. (NASDAQ:GOOGL) (NASDAQ:GOOG) and Amazon.com Inc. (NASDAQ:AMZN) have bucked the trend.
On average, the group is down 1.7% year-to-date while the popular Roundhill Magnificent Seven ETF (NYSE:MAGS) has fallen 2.5% during the same period.
Tech's Elite Turn From Leaders to Laggers in Early 2026
| NAME | TOTAL RETURN (YTD) |
|---|---|
| NVIDIA Corporation | -2.18% |
| Alphabet Inc. | +7.14% |
| Apple Inc. | -4.62% |
| Microsoft Corporation | -5.30% |
| Amazon.com, Inc. | +2.49% |
| Meta Platforms, Inc. | -6.67% |
| Tesla, Inc. | -2.73% |
| Magnificent Seven (Average) | -1.70% |
| Roundhill Magnificent Seven ETF | -2.50% |
For much of the past three months, the Magnificent Seven outperformed the equal-weighted market. That relationship snapped as 2026 began.
This tech-elite underperformance has weighed on the broader market. The S&P 500 is barely positive so far in 2026, up just 0.7%, highlighting how heavily index-level performance still depends on a handful of mega-cap names.
The Magnificent Seven still account for more than 35% of the S&P 500's total weighting. That dependence becomes even clearer when the concentration effect is removed.
Notably, an investor holding an equal-weighted version of the S&P 500 — such as the Invesco S&P 500 Equal Weight ETF (NYSE:RSP) — would be up 3.3% year-to-date, outperforming the market-cap-weighted index.
Investors Rotate Away From Tech And Into Value
“The Nasdaq 100 took a knock at the end of last year as investors cut their exposure to growthy tech names, while reinvesting the proceeds in overlooked value plays,” said David Morrison, analyst at Trade Nation.
“This has broadened out equity exposure and is a healthy development for the market,” he added.
The shift shows up clearly across style factors, as value stocks have effectively led growth in recent months.
The Vanguard Value ETF (NYSE:VTV) has risen by 7% since mid-october, outperforming the Vanguard Growth ETF (NYSE:VUG) by 5 percentage points.
Is This Just A Pause For Mega-Cap Tech?
Some analysts see the recent pullback as a breather rather than a breakdown, especially with fourth-quarter earnings approaching.
According to Jeff Buchbinder, chief equity strategist at LPL Financial, artificial intelligence remains the dominant force behind earnings growth.
AI-related names, including the Magnificent Seven, are expected to drive roughly 80% of the S&P 500's projected 8% earnings growth in the fourth quarter, based on current estimates.
The technology sector alone is forecast to grow earnings by more than 25%, with final results potentially pushing growth above 30%.
“Slicing this another way, the biggest six technology companies, i.e., the Mag Seven excluding Tesla (TSLA), are expected to drive over 60% of S&P 500 earnings growth for the quarter by growing earnings an average of 19%,” Buchbinder said.
That pace would more than double what the remaining 493 companies in the index are likely to deliver.
What Comes Next For The Bull Market?
Earnings growth beyond mega-cap tech has quietly improved. The remaining S&P 493 grew profits 11.8% in the third quarter of 2025 and could post double-digit growth again, according to LPL Financial.
That gap still explains why the firm favors large growth stocks over large value, even as leadership starts to shift.
A true turning point depends on Washington. Cyclical value stocks can keep gaining ground only if fiscal policy adds fuel while technology cools, according to Buchbinder.
He expects that additional stimulus tied to the One Big Beautiful Bill Act may extend that rotation, with industrial stocks emerging as a standout theme for the year ahead.
For now, the Magnificent Seven are no longer carrying the market alone. Wall Street is getting a first look at a rally that does not depend on tech giants leading every step.
Image: Shutterstock
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