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The days of these seven tech giants moving together like a single pack are over. Investors are no longer rewarding every company that simply mentions artificial intelligence (AI); they are now looking for proof that the billions being spent are actually turning into profits.
This has created a massive gap between the stocks that are leading the market and those that are being left behind. We’ve seen it in software stocks. We’ve seen it in some financial services stocks.
Could it really be that this winter flu is hitting the “untouchable” Mag 7 names, too? That’s what I see in my chart work.
A Closer Look at the Magnificent 7
The biggest story this week is the eye-popping amount of money these companies plan to spend on AI infrastructure like data centers and chips. In total, the group is expected to pour over $680 billion into these projects in 2026 — a huge jump from the $400 billion spent just a year ago.
In this environment, the companies that sell the tools for AI are doing much better than the ones buying them — at least for now.
Nvidia (NVDA) continues to be the biggest winner because it sells the essential chips everyone else is fighting to buy. Since it doesn't have to build its own massive factories, it stays lighter. Its customers do the heavy spending.
Alphabet (GOOG) (GOOGL) also stands out because it is the only member of the group whose stock is consistently reaching new highs alongside the broader market. It has managed to grow its search and cloud business fast enough to help justify its spending.
However, even that stock market price leader is looking very toppy to me. In fact, trying to find my favorite Mag 7 name right now is a case of which one has a chart that looks “less bad.” When you pair a lot of droopy charts, like the ones I share below, with high valuations and a market starting to rethink just how jacked up they should be about AI, you have a recipe. Not for another 1,000 points up on the S&P 500 Index ($SPX) — but maybe down.
Let’s go to the charts.
GOOG. Like I said — droopy, right? Not done, but seriously wounded.
NVDA is hanging in there. But a flat chart since August of last year is not my idea of a market leader.
Microsoft (MSFT) is off more than 25% since October, and the vibe surrounding software firms of all sizes is not great. And that’s an understatement. If it doesn’t hold here, $350 is a realistic downside target.
Is the Party Over for the Mag 7?
For years, these seven stocks were seen as the safe stocks. They always went up. Today, they are acting much more like volatile, high-risk stocks. If the spending keeps rising without a big payoff, investors may continue to rotate into boring but steady sectors like banking or energy. Or sell off the whole market in sync. Stay focused and vigilant.
Rob Isbitts created the ROAR Score, based on his 40+ years of technical analysis experience. ROAR helps DIY investors manage risk and create their own portfolios. For Rob's written research, check out ETFYourself.com.
On the date of publication, Rob Isbitts did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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