Shares of seven established U.S. technology giants have surged past the gains of newer tech leaders this year.

As of the latest market close, the so-called "Seven Knights" of the old guard, including Micron Technology (MU), Dell Technologies Inc. (DELL), Intel (INTC), Lenovo Group Ltd. (LNVGY), Nokia Oyj (NOK), Texas Instruments (TXN), and Cisco (CSCO), have posted an average year-to-date gain exceeding 170%. This performance significantly outpaces the average 5.57% gain for the newer tech elite, often referred to as the "Magnificent Seven," which includes NVIDIA and Apple.

The Resurgence of Established Tech Players

The comeback of these established technology firms is driven by a new phase in the evolution of the artificial intelligence industry. Industry analysts note that as AI infrastructure development moves beyond simply purchasing GPUs into a phase of comprehensive expansion requiring all supporting components, hardware manufacturers with mature manufacturing and delivery capabilities are becoming the critical builders of the AI physical world. The "scarcity premium" for these related stocks is also being reassessed.

These veteran tech giants, once highly sought-after during the 1990s dot-com bubble before fading during subsequent industry shifts, are now riding the wave of AI infrastructure expansion to stage a dramatic comeback at the center of the capital markets stage.

Detailed Performance of the "Seven Knights"

Micron Technology, once a memory chip maker heavily tied to PC cycles, has broken through AI computing bottlenecks with its high-bandwidth memory (HBM) products, elevating it to a core investment target in a super-cycle for memory.

Dell Technologies Inc., the dominant PC hardware maker of the 1990s, has transformed into an AI server supplier, achieving a strong earnings rebound with multi-billion dollar orders.

Intel, the chip leader that missed the mobile era, is seeing a recovery in CPU demand for the Agent era and is reshaping its systemic value in AI infrastructure by leveraging synergies between its advanced packaging and foundry businesses.

Lenovo Group Ltd., as its "Hybrid AI Strategy" enters a phase of commercial realization, is not only experiencing a surge in AI server orders but also delivered its best-ever fiscal year results with significant revenue growth from AI-related businesses.

Nokia Oyj, following acquisitions of Alcatel-Lucent and Infinera, has gradually transformed from a former mobile phone giant into a network equipment provider, securing a key share of the global optical communications market.

Texas Instruments is seeing renewed earnings momentum and new growth avenues from the robust demand for high-power power management chips in AI servers.

Cisco, the market capitalization champion of the dot-com bubble era, is regaining growth valuation after 25 years of relative quiet, as the AI data center expansion boom rekindles demand for high-end network switching and routing equipment.

In comparison, among the newer "Magnificent Seven" tech leaders, only NVIDIA maintains a year-to-date gain of around 19.48%. Stocks like Apple, Google, and Amazon have seen gains in the 10% to 16% range, while Tesla, Microsoft, and Meta have even recorded negative returns.

Drivers Behind the Collective Comeback

The core driver for the sharp rally in the "Seven Knights" this year is the transition of AI computing infrastructure investment from "buying GPUs" to a comprehensive expansion phase of "buying all supporting components."

Analysis indicates that while AI investment in 2024-2025 focused on NVIDIA GPU procurement and related cloud business areas, the large-scale deployment of AI data centers from 2026 onwards sees bottlenecks spreading from chips to the entire infrastructure stack. This benefits server manufacturers (Dell, Lenovo), memory (Micron), network equipment (Cisco, Nokia), CPUs and edge inference chips (Intel), and power management and analog chips (Texas Instruments).

These companies share common characteristics: mature manufacturing and delivery capabilities, global customer networks, and oligopolistic positions in their respective fields. As AI capital expenditure shifts from cutting-edge R&D to scaled deployment, these established hardware giants become the beneficiaries with the highest certainty. Essentially, the market is pivoting from betting on "who invents the future" to betting on "who builds the future," and these veteran hardware firms are precisely the builders of the AI physical world.

Reassessing the "Scarcity Premium" for Hardware

The resurgence of hardware-centric "Seven Knights" represents more than a temporary sector rotation; it signifies a structural reshaping of value distribution within the AI industry chain.

From an industry perspective, as large language models evolve from "perception" and "generation" to "reasoning" and "action," computing power consumption is skyrocketing. Consequently, computing architecture is shifting from being purely "chip-driven" to "system collaboration-driven," making technological iteration in supporting infrastructure an inevitable trend.

Investment in AI is flowing into servers, semiconductors, memory, power infrastructure, data centers, software, and R&D. This expansion in AI infrastructure investment is also altering the investment narrative for technology stocks.

Hardware stocks have traditionally been viewed with a strong cyclical lens within the tech sector. Previously, companies like Micron and Intel were often analyzed through this traditional cyclical perspective, making their performance "ceilings" more apparent. However, as industry trends become clearer and order expectations strengthen, the market is beginning to assign growth or even scarcity asset valuation premiums to these companies.

The core framework of the tech stock investment narrative is shifting from the old model of "platform monopoly + network effects" towards "physical infrastructure + supply chain bottlenecks." This means the market is starting to view computing hardware similarly to energy or mining sectors—where control over scarce capacity grants pricing power.

Sustainability of the Rally

The explosive growth of the "Seven Knights" amid the AI infrastructure boom raises questions about whether the current AI fervor might repeat the excesses of the late-1990s internet bubble.

Historical comparisons suggest the foundation for this round of AI investment is more solid, both in terms of investment intensity and corporate financial health. The cumulative increase in the share of AI investment in U.S. GDP since Q4 2022 remains below the peak levels seen during the internet revolution. Furthermore, the rise in market capitalization for leading tech companies remains relatively matched with profit growth, unlike the disconnect seen during the dot-com era. Key financial metrics like cash-to-market-capitalization ratios, ROE, and net profit margins for top firms are also stronger now than during the tech bubble, indicating AI investment rests on a more robust financial base.

However, a solid foundation does not eliminate risks. As the AI arms race among major cloud providers intensifies, the sustainability of related capital expenditure becomes a core issue for the coming period. The current AI computing demand is primarily driven by hyperscalers like the "Magnificent Seven." While capital expenditure growth for these giants could exceed 60% in 2026, maintaining such high growth into 2027 is uncertain. Potential constraints like power grid bottlenecks, equipment shortages, and public opposition to data center construction could delay or cancel projects.

Furthermore, massive capital expenditures ultimately need to be justified by revenue from application layers. The window for verifying the return on investment (ROI) for AI is approaching. If cloud providers cannot demonstrate by 2027-2028 that their AI capital spending has generated sufficient revenue growth, the chain reaction of spending cuts could be severe. Profit beats and safety margins for major tech firms have also narrowed since 2023, potentially leading to future market skepticism about the rationale for capital expenditures.

Only when the revenue-generating speed of the commercial loop outpaces the cash-burn rate can this round of AI industry expansion form a virtuous cycle and truly endure through market cycles.