The Magnificent Seven stocks have been a huge source of gains for the S&P 500. Without the cohort of tech titans, I think it’ll be tough for the broad market to top 20% returns for a third straight year. With big tech earnings season beginning to wrap up, the reaction has ranged from better-than-feared—in the case of Apple (NASDAQ:AAPL) earnings—to just plain disappointing all around—think Alphabet (NASDAQ:GOOG), which missed on revenue amid climbing AI spend, which could come under question in the DeepSeek era.

While technically not impossible for the S&P 500 to run without as much help from the Mag Seven, scoring the “20% hattrick” this year, something I pointed out as a possibility in a previous piece, will be highly improbable. In any case, the first round of earnings season will not be make or break for the Mag Seven, even amid the DeepSeek dive, which, I believe, the tech titans still need more time to digest. Reportedly, Meta Platforms (NASDAQ:META) took to the “war room” following news of DeekSeek’s unexpected AI breakthrough.

The DeepSeek impact on the Mag Seven could be profound

Though demand for “cheaper” AI could pave the way for an eventual curtailing of supersized AI spending budgets, I wouldn’t count on such, especially as the Mag Seven become more specialized with target markets for which they’re tailoring their AI solutions. Additionally, reasoning models may be today’s hot AI tech. Soon, agentic AI and physical AI may be the new hot things to move markets.

Either way, there’s no reason why top-of-the-line, expensive, premium AI cannot co-exist with cheap, consumer-friendly AI that’s “just good enough.” Given certain applications, bang for the buck may be a top priority. For others, such as AI drug discovery, the very best AI will be needed, with cost acting as the least important aspect of a model. In any case, watch for the Mag Seven plays to find the right balance between high-end enterprise-grade AI and low-cost consumer-facing AI.

Jefferies ranked the Mag Seven for the year—here’s what came out on top.

Jefferies ranked each one of the Magnificent Seven with their methodology, which takes into account various quantitive metrics. Indeed, AI innovation plays a big role in the ranking. But what came out on top? Unsurprisingly, Nvidia (NASDAQ:NVDA) topped the list. It’s been a massive winner that’s singlehandedly led the Mag Seven to greater magnificence.

Though DeepSeek left a scar on the stock, Jensen Huang seems unrattled, especially as AI demand looks to take things up a notch. Indeed, the cost of training a model may be coming down as large language models (LLMs) face commoditization. That said, powerful GPUs from the Blackwell (and Rubin) generation will be necessary for high-end AI.

Not to mention, more power can help models be more efficient and compact. Additionally, inference, rather than training, will still be in high demand, which could keep Nvidia’s top GPUs in high demand and short supply. Personally, I’d wait for the tides to settle before jumping in as Nvidia gets dragged down further in a bear market. The stock still hasn’t recovered ground from the DeepSeek sell-off like other Mag Seven firms have. That’s concerning and suggests investors should think over the deeper, long-lasting impact of DeepSeek and models like it. 

Though Nvidia is a great pick, I’m not so sure it deserves to be ranked number one, especially given tariff threats, rising rivals in custom silicon, and, of course, the deep wound from DeepSeek.

And at the bottom?

At the bottom of the Jefferies ranking was Microsoft (NASDAQ:MSFT), an AI innovator that’s fresh off a “lost year” of sorts after gaining a mere 1% in the last year. Indeed, Microsoft is one of the heavy AI spenders that may need to take a step back as more investors prioritize capital-light AI beneficiaries.

Given the recent lack of performance, it’s easy to count Microsoft out of the game, especially after a relatively muted quarterly showing. I say don’t bet against CEO Satya Nadella as he repositions the enterprise giant for the middle innings of the AI revolution. You can bet that DeepSeek is on his mind after tech’s turbulent finish to January.

In any case, I think MSFT stock is a bargain at 31.1 times forward price-to-earnings (P/E) as its AI growth continues to flex its muscles. If I were to rank the Mag Seven, I’d definitely place Microsoft above Nvidia. There’s still risk inherent with Microsoft, but probably less so than with Nvidia, given where we stand today.

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