QUICK SPARK: S&P 493 Hammers Magnificent Seven in the Year of the Underdog

An exchange-traded fund holding the S&P 500 minus those seven names is outperforming the Magnificent Seven group by nearly 17 percentage points this year.

The Defiance Large Cap Ex-Magnificent Seven ETF (NASDAQ: XMAG ) is up 12.9% year to date.

The Roundhill Magnificent Seven ETF (BATS: MAGS ) is down 3.7%.

Thursday amplified the gap.

MAGS fell 4.63% after Alphabet Inc. (NASDAQ: GOOGL ) raised its 2026 capital expenditure guidance — the money a company spends on data centers, chips and other long-lived assets — to a range of $195 billion to $205 billion from $180 billion to $190 billion.

Tesla Inc. (NASDAQ: TSLA ) missed on earnings, with free cash flow turning negative.

Tesla lost 14.52% on the day.

Alphabet lost 7.13%.

Last year the trade ran the other way.

MAGS returned 22.99% in 2025 against 15.63% for XMAG.

QUICK CONTEXT: Magnificent Seven Lose Their Market Grip The Magnificent Seven have stopped carrying the market in 2026.

Through Thursday’s close, an equal-weight basket of Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta and Tesla was down about 3.6% for the year, while the broader S&P 500 had gained roughly 8.2% over the same period.

The weakness is uneven but severe.

Tesla had fallen about 29%, Microsoft nearly 21% and Meta 8%.

Alphabet and Amazon were barely positive.

Apple, up roughly 18.5%, and Nvidia, up 12%, were the only clear winners by a wide margin, leaving the group increasingly dependent on two stocks.

The split widened on July 23, when all seven shares fell and the equal-weight basket dropped about 4.7%.

Alphabet and Tesla led the decline, putting fresh attention on whether enormous commitments to artificial intelligence, data centers, robotaxis and robotics can generate adequate returns for future shareholders.

That matters because these companies remain among the largest weights in major U.S. indexes.

Their earlier gains made benchmarks unusually dependent on a small technology cluster; their 2026 underperformance has broadened market leadership.

Investors are no longer rewarding AI spending automatically.

They want clearer evidence that escalating investment will produce durable cash flow and profits.

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