“Things that have never happened before, happen all the time.” – Stanford Professor Scott Sagan
In 2026 a new question has surfaced- are the Magnificent 7 just not magnificent anymore? The Magnificent 7 refers to 7 stocks that have seen exponential growth and are some of the largest in the USA now: AAPL, AMZN, GOOGL, MSFT, META, NVDA, TSLA. These behemoths have dominated US markets and indexes since the 2022 bear market- driven partially by the growth of AI and their server businesses. MSFT, AMZN and GOOGL are referred to as hyperscalers- which are massive cloud service providers serving on-demand computing, storage and networking globally (think AWS). Basically, providing the support & infrastructure our growing data hoard requires. ORCL is also a key hyperscaler as they are a top provider of data storage. But in 2026, market leadership has shifted with MSFT & AMZN underperforming semis.
Up until recently, the Mag7 have been massive cash cows- generating hundreds of billions of dollars in Free Cash Flow (FCF) which they have used for large share buybacks or dividends. But there is a sea change occurring- we are seeing the AI frenzy drive a huge investment and buildout of infrastructure causing capital expenditures (Capex) to rise rapidly and eat all the FCF. In 2025, GOOGL generated $73B in FCF, this year, might just break even. MSFT produced $72.96B last year and is also expected to be close to breakeven with their expected $116B in capex this year (up from $28B in 2023).
We are very keen to follow the estimated $750 billion in hyperscalers capex this year- which leads us to stocks we are calling ROC’s- Receivers Of Capital. Many of these are semiconductor stocks, others include AI infrastructure stocks. It is rare that one stock, or even one sector or market, remains in leadership forever so the shift in leaders from Mag7 to other parts of the market is not uncommon. The AI arms race buildout won’t last forever at this high of a burn rate, but we are looking at a once in a lifetime shift of capital which we think will drive transformative growth.