Farewell to the Magnificent 7: Meet the Rising AI Stock Stars

The renowned group of stocks on Wall Street, dubbed the Magnificent Seven, might be showing signs of age. Enter the Great Eight, or maybe the Golden Dozen, or even the TenAI of GenAI.

Nearly three years have passed since OpenAI’s ChatGPT thrust artificial intelligence to the forefront of the global economy. During this period, one investment strategy consistently dominated the US stock market: Buy the Mag Seven. This elite group includes Nvidia Corp, Microsoft Corp, Apple, Alphabet, Amazon.com, Meta Platforms, and Tesla, all recognized as top contenders for remarkable returns amidst the largest technological shift since the internet.

While this narrative has largely played out, an unexpected change emerged during the race for global dominance. The AI trade expanded to include a range of companies beyond the beloved big tech giants. As a result, investment strategies focused on the Magnificent Seven—accounting for over half of the S&P 500 Index’s over 70% surge since early 2023—might be neglecting firms like Broadcom Inc., Oracle Corp., and Palantir Technologies Inc., which are also well-positioned for success in an AI-driven future.

“The Mag Seven may have excelled in previous tech cycles, such as mobile, the internet, and e-commerce, but that doesn’t assure their success now,” commented Chris Smith, portfolio manager for Artisan Partners’ Antero Peak Group, which oversees $2.4 billion. “The upcoming winners are likely to be those who access vast and unrestricted markets through AI, potentially surpassing the Mag Seven in size.”

Nonetheless, the original seven are not disappearing anytime soon. The Mag Seven represents nearly 35% of the S&P 500, with earnings anticipated to grow over 15% by 2026, buoyed by a 13% revenue increase, as per Bloomberg Intelligence. In contrast, the rest of the S&P 500 (excluding the Mag Seven) is estimated to see only a 13% rise in earnings and a mere 5.5% revenue growth next year.

However, disparities exist within the group’s stock market performance. Nvidia, Alphabet, Meta, and Microsoft are viewed as well-positioned for an AI-focused world, with stock values rising between 21% and 33% this year. In contrast, Apple, Amazon, and Tesla face uncertainty and are underperforming significantly.

“It’s challenging to see the current Mag Seven as the ultimate representation of AI,” Smith noted.

The Bloomberg Magnificent 7 Total Return Index increased by 0.5% on Monday, led by Nvidia.

Consequently, Wall Street is exploring alternatives to identify the true frontrunners. Some analysts have honed it down to a “Fab Four” consisting of Nvidia, Microsoft, Meta, and Amazon. Jonathan Golub, chief equity strategist at Seaport Research, suggests excluding Tesla to create the “Big Six.” Meanwhile, Ben Reitzes from Melius Research endorses an “Elite 8” that includes the Mag Seven along with chipmaker Broadcom, now the seventh-largest firm in the U.S. by market cap.

However, none of these adaptations encapsulate the entire AI trade. For example, Oracle’s shares have surged over 70% this year, fueled by its AI-focused cloud computing efforts. Meanwhile, Palantir has emerged as the top contender in the tech-heavy Nasdaq 100 Index, soaring 138% in 2025 due to strong demand for its AI software.

“A company might become too significant to overlook,” stated Jurrien Timmer, managing director of global macro at Fidelity Investments, which manages $16.4 trillion in assets. “As the AI narrative progresses, new leaders may eclipse the established ones, even if the latter continue to perform well.”

The concept of the Magnificent Seven isn’t new to Wall Street, which routinely compiles collections of trending stocks to simplify market activities for investors—from the Nifty Fifty of the 1960s to the Four Horsemen of the dot-com boom and the FAANG stocks that have dominated from the smartphone era to the present. Just as those collections succeeded during their respective epochs, they eventually ceded power to new challengers, a transition likely to occur within the realm of AI.

An indication of Wall Street’s shifting attention beyond the Mag Seven is the launch of futures and options by Cboe Global Markets Inc. based on the newly created Cboe Magnificent 10 Index. This index will include the original seven along with Broadcom, Palantir, and Advanced Micro Devices Inc., Nvidia’s smaller rival in the processing chip market.

This index highlights the subjective nature of such evaluations. Cboe announced this on September 10—coincidentally coinciding with Oracle’s largest single-day surge since 1992, reaffirming its status as a vital AI player. Despite Oracle outperforming most of the Mag Seven since the beginning of 2023, it was still omitted from the Magnificent 10.

“We need to broaden the discussion beyond just the Mag Seven,” remarked Nick Schommer, a portfolio manager overseeing approximately $34.7 billion across various investment strategies, including the Janus Henderson Transformational Growth ETF. “Oracle and Broadcom are certainly part of that dialogue now.”

While Cboe did not provide a representative to discuss the index’s criteria, it stated in its press release regarding the Mag 10 that selections were made “based on liquidity, market value, trading volume, and leadership in sectors like artificial intelligence and digital transformation.”

Next Generation Leaders

Wall Street analysts have suggested various names as potential candidates for the next wave of leadership, with some companies frequently mentioned. Taiwan Semiconductor Manufacturing Co. is seen as a key player in the AI ecosystem, alongside Oracle and Broadcom. Palantir is recognized as one of the few software winners in a time when established leaders like Salesforce Inc. and Adobe Inc. are perceived as lagging.

As for stocks losing favor, Apple and Tesla are at the forefront. Apple is not maintaining the same growth trajectory as other tech giants and is considered behind in AI development. Meanwhile, Tesla’s electric vehicle market is under significant pressure due to increased competition and declining sales.

Yet, both still have devoted shareholders hoping for their future potential. For Apple, there is a belief that the iPhone will remain a primary device for millions engaging with AI technology. Tesla investors are optimistic about CEO Elon Musk’s projects in autonomous vehicles and humanoid robots, both of which require AI integration for future success.

A growing array of sectors is benefiting from AI advancements, including power generation and various components of AI infrastructure development. This includes firms like Arista Networks Inc. (communications), Micron Technology Inc. (memory chips), and storage companies such as Western Digital Corp., Seagate Technology Holdings Plc, and SanDisk Corp.

Another complication in delineating the AI narrative is that many key companies remain privately held. OpenAI would undoubtedly rank high on any list of AI triumphs, yet it remains inaccessible to many investors, despite reportedly aiming to sell shares at a valuation near $500 billion. Others, like Anthropic and SpaceX, also remain outside the public market.

As AI continues to evolve, beneficiaries are likely to shift from those facilitating its growth to companies providing AI-specific products and services, ultimately benefiting those who harness AI to improve efficiency and expand. This transformation will likely define the eventual victors of AI—regardless of Wall Street’s designations.

“As this evolution unfolds, the leaders of the AI boom may become overpriced, and their growth and cash flow might not look as advantageous,” cautioned Fidelity’s Timmer. “The risk with a concentrated market is that it might encounter a disruptive change if leadership wanes. While the current valuation levels don’t raise any alarms for me, we can’t definitively predict whether the Mag Seven era will end with a smooth transition or a more tumultuous conclusion.”

© 2025 Bloomberg

Stay updated with Moneyweb’s comprehensive finance and business news on WhatsApp here.