If you had asked a fund manager a year ago to name the market's most crowded trade, chances are they would have said buying the Magnificent Seven. Today, those seven megacap tech stocks are looking a bit lonely.
The Roundhill Magnificent Seven exchange-traded fund has fallen 13% in June -- on pace for its worst month since Roundhill created the fund in April 2023, according to Dow Jones Market Data. (A previous version was called the BIG Tech ETF.)
Meanwhile, the Defiance Large Cap ex-Mag 7 ETF, which tracks all other S&P 500 stocks, is up 2.6% this month.
Amid a historic surge in chip stocks and a continued malaise in software, the equities market has seemed to totally forget the Mag Seven, Empower's Chief Investment Strategist Marta Norton told Barron's this week.
Each company has its own questions: Amazon.com, Meta Platforms, Microsoft, and Alphabet are pouring money into artificial-intelligence build outs; Nvidia is competing with a bevy of new chip offerings; Apple is fighting rising memory prices; and Tesla is as volatile as ever. Altogether, the Mag Seven companies have shed some $3 trillion in value this month.
This may all be predictable. After all, we're just six weeks removed from the Mag Seven ETF hitting an all-time high on May 14. But given how drastically the stock market has transformed in the last three years, it is worth asking whether "Mag Seven" really means anything these days.
BofA Securities analyst Michael Hartnett first coined the term in 2023, after the megacap tech stocks dragged investors out of the 2022 bear market. They outperformed the S&P 500 each year through 2025. "Long Mag Seven" was a crowded trade for good reason.
The seven stocks still make up more than 30% of the large-cap index by market capitalization. But other, less heralded names, particularly those supplying the Mag Seven with AI hardware, have emerged as Wall Street favorites, leading the market higher in 2026.
After a blockbuster earnings report this week, memory chip maker Micron Technology now has almost the same market cap as Meta. Meanwhile, chip equipment maker Applied Materials and semiconductor giant Broadcom joined Nvidia as the second- and third-most crowded long positions among hedge funds last month, according to a report from financial software company Hazeltree.
Over in the Elon Musk cinematic universe, Tesla isn't even Musk's largest public company anymore. And SpaceX's record-setting initial public offering two weeks ago has stolen some attention from the rest of the market.
If anything, the Mag Seven are now more attractive to credit investors, who see the group as highly reliable bond issuers. In particular, the AI cloud providers -- Alphabet, Microsoft, Meta, and Amazon -- have started issuing hundreds of billions of dollars in debt to finance chip purchases and data-center construction.
Norton, the Empower strategist, said the Mag Seven group was like the new popular kid in the fixed-income market.
That doesn't mean stock investors should abandon ship or flee to corporate bonds. As Barron's Jacob Sonenshine noted earlier this week, some of the individual Mag Seven stocks now trade at just a slim premium to the S&P 500 based on forward valuation multiples.
Why the relative discount? Well, it isn't 2023 anymore, when these companies were growing rapidly without so many questions about capital investments and competition.
The Mag Seven remain huge companies that make "heaps of cash," said Kimberly Forrest, chief investment officer at Bokeh Capital Partners. They just now have "magnificent worries," too.
Write to Nate Wolf at nate.wolf@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
June 26, 2026 14:20 ET (18:20 GMT)
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