Asger Risom
Wall Street’s favourite stocks are finally losing their grip on the market — and investors are breathing a sigh of relief.
The ‘Magnificent 7’ are losing steam — and that’s exactly what Wall Street wanted
For the first time in years, the US stock market is starting to look less like a one-trade bet on Big Tech and more like a broad-based investment landscape. And investors, by and large, seem pleased.
The S&P 500 slipped 0.19% in the latest session, but an equal-weight version of the index — which treats all 500 companies the same — edged higher. That divergence tells a simple story: investors are rotating away from the market’s biggest tech names and spreading their bets more widely.
At the heart of that shift is the so-called “Magnificent Seven”: Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla. Together, they’ve dominated market returns for years. Now, they’re starting to drag.
The tech giants are no longer carrying the market
Only two of the Magnificent Seven — Alphabet and Amazon — are in positive territory so far this year. The rest are down, and in some cases sharply. Meta has fallen more than 4%, while Apple is close behind with a near-4% decline.
That matters because the Mag 7 have grown so large that they now account for more than 30% of the S&P 500’s total value. Even investors buying broad index funds in search of diversification found themselves heavily exposed to the same handful of companies.
The concentration became so extreme that some analysts openly warned the market was vulnerable to any stumble by Big Tech. Apollo Global Management’s chief economist Torsten Sløk recently highlighted just how lopsided the index had become — a concern that’s now starting to play out.
A ‘healthy rotation’ away from Big Tech
Many on Wall Street believe the shift away from tech dominance isn’t a crisis, but a correction.
Morgan Stanley Wealth Management’s chief investment officer, Lisa Shalett, has described the move as a “healthy deconcentration” of the market. In her view, earnings growth among the tech giants is slowing, while the other 493 companies in the index are beginning to catch up.
At the same time, cash that once flowed back to shareholders through stock buybacks is increasingly being diverted into massive AI infrastructure spending. That has weighed on sentiment toward the sector that once seemed unstoppable.
The rest of the market is stepping up
The flip side of Big Tech’s struggles is that the broader market is holding up surprisingly well. Smaller and mid-cap stocks are outperforming, and gains are no longer dependent on a narrow group of mega-caps.
Ed Yardeni of Yardeni Research noted that the S&P 400 and S&P 600 — indexes focused on mid- and small-cap companies — are beating the S&P 500 so far this year. In his view, the “Impressive 493” have been outperforming the Magnificent Seven since late last year, and that trend could continue throughout 2026.
For traders and long-term investors alike, that broadening is welcome news. It suggests the bull market doesn’t need a handful of tech stocks to survive — and may even be healthier without them dominating every move.
After years of riding the same winners higher, Wall Street finally appears content to let the market breathe again.
Sources: Morgan Stanley, Apollo Global Management, Business Insider
