The group of stocks known as the "Magnificent Seven," which have been major drivers of the market's record highs in recent years, have seen a reversal in their performance this year. As we move into 2026, all but two stocks in this group have recorded declines. Microsoft has fallen nearly 18%, while Tesla and Amazon.com have each dropped more than 8%. Alphabet, the parent company of Google and seen as a primary winner in artificial intelligence during 2025, is essentially flat for the year. The favored chip stock, NVIDIA, has managed only a slight 1% gain. The Roundhill "Magnificent Seven" ETF has declined nearly 6% year-to-date.

Behind these declines, the market holds significant concerns regarding the soaring capital expenditures these companies are making in the artificial intelligence sector and their ability to meet increasingly high expectations for profit growth. Furthermore, the rapid iteration of AI models and intensifying industry competition are contributing to heightened market volatility.