The Magnificent Seven, AI Trade, and Big Tech: A New Era?

The 'Magnificent Seven' redefined the AI boom, but the trade is spreading. This article analyzes the evolving landscape of Big Tech, AI, and crypto.

The Magnificent Seven, AI Trade, and Big Tech: A New Era?

The 'Magnificent Seven'—Nvidia, Microsoft, Apple, Alphabet, Amazon, Meta, and Tesla—once epitomized the AI boom. Now, the trade is broadening, sparking a shift in investment strategies.

The Evolving AI Landscape

Since ChatGPT's rise three years ago, Big Tech has dominated AI investments, driving over half of the S&P 500's surge. However, gains are now extending beyond these giants, suggesting that relying solely on the 'Magnificent Seven' might miss emerging opportunities.

While this group still holds significant sway, controlling almost 35% of the S&P 500, performance varies. Nvidia, Microsoft, Alphabet, and Meta are thriving, while Apple, Amazon, and Tesla lag. This divergence raises questions about their sustained roles in the AI-driven market.

Wall Street's Rethinking: The Rise of New Contenders

Analysts are refining the list, with suggestions ranging from a 'Fab Four' to an 'Elite 8.' Yet, these iterations may not fully capture all AI beneficiaries. Companies like Oracle and Palantir are surging, showcasing the expanding scope of the AI revolution. As Jurrien Timmer from Fidelity Investments notes, new winners could eclipse old ones as the AI story unfolds.

Index Makers Adapt

Cboe Global Markets introduced the Magnificent 10 Index, including Broadcom, Palantir, and AMD. This move reflects the growing recognition of key players beyond the original seven. Investors frequently highlight Taiwan Semiconductor Manufacturing, Oracle, Broadcom, and Palantir as vital to the AI ecosystem.

The Magnificent Seven's Challenges & Crypto's Ascent

While Bitcoin and companies like MicroStrategy have a clean narrative, the Magnificent 7 are not so lucky. Apple is facing more regulatory scrutiny than before, Microsoft is facing increased scrutiny, Amazon is in an environment where consumers are changing demand, and Tesla is competing with aggressive competitors in the electric vehicle market. Nvidia, the leading AI company, is starting to see its explosive growth moderate.

Charles Hoskinson on Crypto Adoption

Charles Hoskinson, co-founder of Ethereum, believes the 'Magnificent Seven' will drive cryptocurrency adoption. He points to regulatory developments and existing blockchain projects within these companies as catalysts. Hoskinson envisions these giants integrating crypto into platforms like Android and Windows, making it mainstream. Google, for example, has created its own blockchain on StarkWare technology.

A Final Thought

The AI landscape is dynamic, with opportunities expanding beyond the 'Magnificent Seven.' Keep an eye on emerging players and evolving investment strategies—it's gonna be a wild ride!