The Mag Seven stocks were back in the driver's seat this past week -- and investors should hope they doesn't revert back to the Lag Seven anytime soon.

It was a mixed week for the overall indexes: Although the Dow Jones Industrial Average looked set to close the week lower, the S&P 500 was on pace to end the week up 1%, while the Nasdaq Composite was rising 1.7%.

The Dow's decline could be blamed on the Iran war, which flared again as the latest cease-fire fell apart. Oil's move was relatively muted, with prices falling Thursday and Friday, but it was enough to take some wind out of the rotation out of tech and into everything else.

And what a week tech had. While SpaceX weighed on the Nasdaq 100 when it joined the index Tuesday, Friday saw South Korean memory-chip giant SK Hynix's $28 billion listing of American depositary receipts, giving investors a memory-chip alternative to Micron Technology.

Elsewhere in Big Tech, investors blithely ignored the ongoing backlash against Facebook parent Meta Platforms -- four states are asking for more than $1 trillion in damages in a trial expected to begin next month -- to focus instead on the company's deal with Broadcom to produce its first artificial-intelligence chip and double its compute capacity next year. Shares were on track for a 13% gain this week.

Nvidia, too, staged a massive comeback, jumping more than 7% this week. Morgan Stanley analyst Joe Moore writes that his recent meetings with the company included it "describing 'accelerating growth rates' even as revenues approach the $100 billion per quarter mark."

Ultimately, just two of the Magnificent Seven -- Microsoft and Alphabet -- were on track to finish the week lower, while the Roundhill Magnificent Seven exchange-traded fund was set to close up more than 3%.

But is this renewed Big Tech strength too good to be true? While the sector has helped boost earnings for the S&P 500, which have been exceptionally strong, that growth may be artificially boosted, according to the investment team at Northwestern Mutual. "First, there is still meaningful uncertainty around how sustainable this AI-driven earnings growth will be," they write. "In many cases, current growth is being supported by heavy capital spending to build out AI infrastructure, and those investments are still outpacing the actual revenue being generated."

Yet consensus estimates still look quite rosy, calling for hyperscalers to more than double free cash flow over the coming year. That scenario doesn't leave much room for delays, either due to slower AI uptake or cheap Chinese competitors, which would reduce Big Tech's long-awaited AI payoff, warns Apollo Chief Economist Torsten Sløk. That would be, well, bad. "[The] Magnificent 7 now accounts for so much of the indices, the pain can't stay contained," he writes.

And a weak stock market wouldn't be the only painful outcome of a Mag Seven collapse. "[A] slower payoff wouldn't just be a sector problem," Sløk writes. "[It] would risk tipping the economy into recession and the S&P 500 into a correction."

Yes, the S&P 500 has progressed this year even without the Mag Seven leading the way, and maybe it still can. I, for one, would prefer not having to find out.

Write to Teresa Rivas at teresa.rivas@barrons.com

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July 10, 2026 13:44 ET (17:44 GMT)

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