For years, the recipe for making money in the stock market was simple – you owned the Magnificent 7.
The Mag 7 includes Apple (AAPL), Amazon (AMZN), Alphabet (GOOGL), Meta Platforms (META), Microsoft (MSFT), Nvidia (NVDA), and Tesla (TSLA).
Back in late 2022, this bull market was born alongside the introduction of ChatGPT’s generative AI. Every member of the Mag 7 is leveraged to AI in some way, with share prices soaring amid the hype.
From 2023 through the end of 2025, the Mag 7 averaged 55% of the S&P 500’s annual return, delivering over half of the gains seen in the index.
But 2026 has been a different story. The Mag 7’s dominance is showing signs of cracking. They are no longer leading the bull market.
Through the first half of the year, the Mag 7 are collectively up just 2% compared to the S&P’s gain of 13%.
That suggests a regime change is underway. And new leaders are already emerging…
For three years, seven AI giants worth $22 trillion drove the market, and millions of retirement accounts. Now, that money is on the move... And more than $1 trillion could flood into a tiny market Larry Benedict is watching… Creating one opportunity after another. Join Larry free on Wednesday, August 26, at 8 p.m. ET. He’ll reveal where that money is going... and the ONE ticker directly in its path. Click here to register.
Forget SpaceX… Elon’s next BIG bet will leave you speechless. (It’s not what you think!) Click here for more info.
We can track the Mag 7 with the Roundhill Magnificent Seven ETF (MAGS).
Following years of strong returns, MAGS stalled out in late 2025 and has been struggling to keep pace ever since. Here’s the chart:
The MAGS ETF made a peak back in late October 2025 at “1.” While the average stock got off to a good start in 2026, MAGS struggled for traction.
Following the start of the war between the U.S. and Iran, the downside in MAGS accelerated to “2.” That was a 20% drop from the October peak, putting the Mag 7 in bear market territory. The drawdown was much sharper compared to broader market indexes like the S&P 500 and Nasdaq.
MAGS recovered along with the rest of the market starting in late March. The rally even saw MAGS make a slight new all-time high at “3.” But new highs didn’t last long, with MAGS falling 14% from the May peak into late June.
Overall, the Mag 7 hasn’t really gone anywhere for the past 10 months, despite the S&P 500 continuing to make new highs during that time.
Given the weight of the Mag 7 in the S&P 500, that shows new leadership is emerging elsewhere.
Several years of massive gains drove the Mag 7’s share of indexes like the S&P 500 to historic levels.
But record concentration puts index investors at risk of missing out on big gains in other sectors when the trend fades.
Just think about it. The top 10 stocks in the S&P 500 currently make up 38% of the index. Since the end of last October, the Mag 7 have gone nowhere, but the S&P is up 13%.
In order to counter the lag in the Mag 7, that means other sectors and industries must be jumping higher. But you’d never notice if you only paid attention to the indexes’ action on the surface.
We’re already seeing incredibly high return dispersion across stock market sectors this year, which means big moves are happening underneath the market’s hood.
That means you need to be actively searching for the new market leaders… or risk getting left behind by holding funds tracking indexes like the S&P 500 and Nasdaq.
That’s why I’m holding my AI Retirement Reset briefing next week.
Given how many retirement accounts hold the Mag 7 and other AI names, this rotation into other sectors is putting any number of portfolios at risk… not just from the Mag 7 falling but also from missing out on the gains of the new market leaders.
If you haven’t yet, take a moment to RSVP with one click for Wednesday’s event. There, I’ll give away one ticker benefiting from the new money flows… and break down the larger opportunity I see forming as the market shifts away from the Mag 7…
Regards,
Larry Benedict
Editor, Trading With Larry Benedict
Reading Trading With Larry Benedict will allow you to take a look into the mind of one of the market’s greatest traders. You’ll be able to recognize and take advantage of trends in the market in no time.
