Artificial intelligence is dividing the fortunes of the Magnificent Seven

AI race is splintering big names, with investors pointing to a divergence in business approach, stock performance

- Roshan Fernandez

The "Magnificent Seven" stocks are starting to grow apart. They are not quite heading to splitsville, but some of the market's tech heavyweights have made more headway in artificial intelligence—and that has put a strain on their relationship. At least with respect to their recent relative stock performance.

"They are in therapy," said Dan Morgan, senior portfolio manager at Synovus Trust, of the Magnificent Seven's diverging paths.

Amazon.com, Alphabet, Apple, Meta Platforms, Microsoft, Nvidia and Tesla have lorded over the stock market in recent years, linked by the outsize role they share in the economy's future and the significant slice they comprise in the benchmark S&P 500 index.

This year, though, shares of Nvidia, Meta and Microsoft have climbed about 20% or more, while Apple and Alphabet are down 16% and 2%, respectively. Each will soon deliver a quarterly scorecard to investors, with Alphabet and Tesla set to report earnings Wednesday, followed by Meta, Microsoft and Apple the following week.

"It was inevitable. They all can't run in lockstep forever because they do different things," said Jamie Cox, managing partner at Harris Financial Group. "Now, the winners and losers stratification is upon us."

The Magnificent Seven still have a strong grip over the market. Their stocks led the tariff-induced selloff in April, and then helped lift the market all the way back during its march toward new highs. Those big names represent about 35% of the S&P 500, according to Dow Jones Market Data, and investors don't expect that to change soon.

One major reason the seven were grouped together in the first place was that those seven companies were spearheading the AI push, Michael Hartnett, the Bank of America strategist who is credited with coining the term "Magnificent Seven" in 2023, has said.