The Magnificent Seven have been running out of fuel well before we rang in the new year. And while the Mag Seven may have clocked in the most underwhelming first three weeks of the year in quite a while (the Mag Seven usually start new years with strength rather than weakness), I certainly wouldn’t hit the panic button just yet. It was just a matter of time before the market strength broadened beyond the Mag Seven stocks, which have been heavy lifters of the S&P 500 for such a long time.
Given the lifting they’ve done over the past five years, I’d argue that a nice quarter (or more) of a breather is more than warranted. Of course, even if the Mag Seven exploded higher in the first three weeks of the year, I’m sure that we’d be hearing about how anxiety-inducing it is that the cohort is becoming overrepresented in the S&P 500. Indeed, overconcentration risk was a hot topic just over four months ago, when it seemed like the Mag Seven were unstoppable.
Jim Cramer isn’t bailing on the Mag Seven, and neither should investors
While it’s easy to dump the Mag Seven and other tech titans while showing more love to the 493 other stocks in the S&P 500, I do think that investors shouldn’t make too much of the past quarter of sideways action. Mad Money host Jim Cramer said that he’s not abandoning the Magnificent Seven, and I think he’s spot-on to continue standing by the cohort as they move through a more challenging time right ahead of quarterly earnings season.
While things could go either way come earnings, I do think that Cramer is spot on when he says the group of seven companies “have too many levers, [and] too much money.”
Even if AI bubble fears or concentration risks resurface, I think it’s far too easy to be negative on the names, especially considering close to half of the Mag Seven have already taken a hit. With shares of the Mag Seven inching higher ahead of earnings, perhaps it won’t take too long before we all forget about the dreadful first three weeks of 2026 that the group had collectively. In any case, Alphabet and Amazon (NASDAQ:AMZN | AMZN Price Prediction) have been notable year-to-date gainers.
The Magnificent Seven have cooled down, but that’s no reason to sell
The Roundhill Magnificent Seven ETF (MAGS), the go-to gauge to judge the performance of the group, may have sunk close to 4% year to date at its worst. But much of the weakness has since been recovered in the last couple of sessions. Of course, volatility is sure to pick up as the earnings come due.
And given that good results are no guarantee of rising share prices, investors should be ready for just about anything, including further downside from these levels. Even if the Mag Seven shifts lower, I believe Jim Cramer’s encouraging commentary should not go ignored. At the end of the day, Cramer was astute in pointing out that the seven firms are run by people who are “too smart to bet against.”
He’s absolutely right to point out the exceptional stewards behind the seven companies. Whether we’re talking about Alphabet (NASDAQ:GOOGL) star CEO Sundar Pichai or the legendary Apple (NASDAQ:AAPL) CEO Tim Cook, these are not folks that investors would want to bet against, even if the tides are turning against them.
Between the massive year-to-date winners (think the memory chip firms) and the stalling Mag Seven, I’d have to go with the latter, even though I’m not so sure when investors will rotate back into the mega-cap tech titans ahead of another big year for the AI boom. While I don’t always agree with Cramer, I think not bailing on the Mag Seven is the right call to make, even if it means more nail-biting moments ahead as the group reports and investors react.
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