Is the 2026 Market Rotation Already Underway? Here’s What Could Lead After the Magnificent 7

It feels like a great rotation out of the Magnificent Seven has already kicked off just over a quarter ago. Undoubtedly, the group that’s helped lead the S&P 500 to impressive gains in the past several years has shown signs of slowing down. Collectively, the group of seven AI-driven tech leaders has stalled, but underneath the hood, you’ll see that not all Mag Seven stocks are built the same.

With Alphabet (NASDAQ:GOOGL | GOOGL Price Prediction) shares holding up well amid the recent wave of volatility despite the outsized gains from the past year, it certainly seems like the Mag Seven is becoming an outdated term to describe the market’s true leaders. In any case, most of the Mag Seven haven’t delivered a level of performance that’s anything close to magnificent.

And it’s becoming tougher to tell if there’s real value to be had in the fall of certain Mag Seven stocks, or if it’s a good time to rotate out of the group into some of the smaller names that have shown signs of relative outperformance.

The Mag Seven are still worth sticking with, but don’t expect too much

Of course, chasing gains can be a bad idea, especially given the powerful AI tailwinds that could help transform the Mag Seven into a winning trade again. Perhaps the latest correction in the names is a breather before the next sprint higher that sees the S&P 500 become even more concentrated. At the same time, one has to think an AI bubble could weigh down much of the Mag Seven, especially the likes of Nvidia (NASDAQ:NVDA), which could lead the way lower if the AI trade were to implode on itself.

While I wouldn’t rush for the exits with the Mag Seven stocks as they come in, I do think the great market rotation could create a new class of winners, which might prove even more magnificent than the Mag Seven stocks. Either way, a broadening rally is a good thing, especially as stock pickers look beyond the names that sit atop your run-of-the-mill S&P 500 index fund.

While the Mag Seven stocks are already in the red for 2026, at least as of this writing, I do think they’ll be fine, at least for the most part. But there’s a stark difference between just doing fine and performing magnificently. And in this piece, we’ll look at two names that might also be worth considering as the market moves on without the Mag Seven leading the pack higher.

Eli Lilly

Shares of Eli Lilly (NYSE:LLY) are worth consideration if you’re looking to expand beyond the red-hot tech sector into a sector that might have growth that’s more resilient in the face of a potential correction in AI froth. Of course, Eli Lilly stock is no stranger to volatility after having spent the first half of last year in a tough spot.

With GLP-1 pills showing plenty of potential, Eli Lilly might be ready for another leg higher. Add the partnership with Nvidia into the equation for work on drug discovery, and perhaps a 52.8 times trailing price-to-earnings (P/E) multiple is more than worth paying for entry into a name that’s gaining speed.

Shares are just over 2% away from all-time highs and could be headed higher, as AI trade anxiety sticks while investors look to rush into something that’s a bit timelier. In any case, there’s a lot of hype as investors expect new obesity pills to hit the ground running. As to whether they’ll surpass expectations, though, remains to be seen. Either way, Eli Lilly looks like a great growth play that’s coming back in a big way.

Broadcom

Broadcom (NASDAQ:AVGO) stands out as a great AI stock to hang onto as the semiconductor trade stays hot, broadening beyond just the GPU makers. Despite recent volatility, some analysts, including those over at JP Morgan, are still upbeat on Broadcom, given momentum in custom silicon as well as networking.

Undoubtedly, these are two critical bases covered by one of the most proven semi titans out there. With 2026 shaping up to be a big year for custom chips, perhaps it might not take too long before the non-Mag Seven chip stock finds its way with the new group of market leaders.

In any case, 33.3 times forward P/E doesn’t seem to be a very high price to pay for a firm poised to benefit more broadly from a continuation in the boom in AI chips.