One of the most dependable features of the stock market is that it’s cyclical.
For much of the past decade, huge tech stocks have been all the rage. I can’t tell you how many times I’ve heard:
“Why not just hold the Mag 7? All you need to invest in is Apple, Amazon, and Google. They outperform everything else.”
And you know what? Over the past 10 years or so, those statements haven’t been entirely wrong. We’ve experienced a market where the biggest and most popular stocks have also been some of the best performers.
However, the tide may be turning. Despite the S&P 500 being up around 10% so far this year, the Magnificent 7 is moving in the opposite direction. Six of the seven stocks are currently experiencing a double-digit drawdown:
Microsoft: -29.3%
Meta: -24.7%
Tesla: -19.5%
Nvidia: -13.7%
Amazon: -12.3%
Google: -11.6%
Apple: -0.2%
Here’s a look at the performance of the other 493 companies that make up the S&P 500, compared to the Magnificent 7 in 2026:
The other 493 stocks that have lived in the shadows of these big tech companies are finally taking back some of the limelight.
And it’s not just those other U.S. companies either; the Mag 7 is significantly underperforming basically every other asset class right now.
I guess every asset class besides Bitcoin, which is down 27% on the year so far.
But what a nice change for diversified investors. Even the biggest companies in the world can, in fact, underperform on occasion.
Not to mention, the mighty S&P 500, which still has 35% of its market cap tied to the Magnificent 7, has been underperforming other segments of the market.
And it’s not like the S&P 500 is having a bad year; it’s up over 10%. But other asset classes are finally taking back some ground.
Emerging markets (smaller, growing economic countries like China, Brazil, Mexico) have now beaten the S&P 500 over the past three years:
Developed markets (established economic countries like the United Kingdom, Japan, Canada) have done the same, besting the S&P 500 since the beginning of 2025:
Lastly, small-cap value (smaller companies at lower valuations) stocks have crushed the S&P since the pandemic:
Will these trends continue? I don’t know.
But I think this is a good reminder that markets are cyclical. Things come and go. No individual stock or segment of the market outperforms indefinitely. This is where a diversified portfolio comes in handy, because nothing works forever.
Thanks for reading!