Are the Magnificent Seven Stocks Losing Their Edge?

The once-unshakable dominance of the Magnificent Seven (or Mag 7) stocks is currently facing serious challenges.

Concerns over high valuations and investments in artificial intelligence are placing pressure on mega-cap technology companies. According to Adam Turnquist, Chief Technical Strategist at LPL Financial, the Bloomberg Mag Seven Index, an equal-weighted collection of these prominent stocks, has officially entered correction territory. Year-to-date, the index is down 10%.

Technical Outlook: Support Levels Under Examination

Turnquist notes that the group has breached a significant uptrend established in October 2023 and is now testing crucial support at the 200-day moving average. If this level does not hold, further declines could occur, possibly returning to the highs or lows seen last August.

The Magnificent Seven’s relative performance against the equally weighted S&P 500 is also at a critical point. Turnquist warns that if support falters, their leadership status could be in jeopardy.

Read also: S&P 500 Selloff Spikes Investor Pessimism: Bearish Sentiment Hits 30-Month High, But This Expert Recommends Investors To ‘Stay Strong And Not Panic Sell’

MAGS ETF Reflects Bearish Trends

The Roundhill Magnificent Seven ETF MAGS, which tracks this group, mirrors the overall weakness seen in the stocks. Year-to-date, MAGS is down 8.07%, with a 9.29% drop occurring in the last month.

Chart created using Benzinga Pro

Technical analysis presents a sobering view, as the Stock now trades below its eight-day, 20-day, and 50-day simple moving averages, signaling a strong bearish momentum. Still, there are signs of buying pressure emerging, with the 200-day simple moving average at $48.76 potentially serving as a support level.

China’s Influence: AI Competition Intensifies

Further complicating the landscape is China’s DeepSeek AI platform, which raises concerns about whether American technology giants can sustain their lead in the AI sector.

With earnings growth facing new hurdles as these companies transition from asset-light to asset-heavy models, investors are left pondering: Is this merely a pullback, or has the era of the Magnificent Seven come to an end?

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