Key Points
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As of July 30, 2026, only Apple among the “Magnificent Seven” outperformed the S&P 500, with Apple up 23% while Meta and Tesla declined 18% and 31%, respectively.
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In 2026, major companies like Alphabet, Amazon, Meta, and Microsoft are projected to spend significantly on capital expenditures (capex) with Alphabet at $195-$205 billion and Amazon at $220 billion.
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Despite robust past performance, the Magnificent Seven are facing challenges with excessive spending and negative free cash flow (FCF) predictions for next year.
In early June 2026, the S&P 500 reached an all-time high, driven mainly by the investments of the Magnificent Seven—Apple, Amazon, Microsoft, Alphabet, Meta, Nvidia, and Tesla—in artificial intelligence (AI). However, the first seven months of 2026 saw most of these stocks underperforming against the benchmark.
While aggressive capex in AI aims to boost long-term growth, it has left investors grappling with either negative FCF or faltering growth prospects. Companies like Tesla are now trading at significant multiples, with Tesla at 139 times estimated earnings, indicating investor skepticism regarding future returns.
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