With more analysts drawing parallels between the stock market and the broader economy, the “Magnificent 7” have become a poster child of a growing divide between Big Tech and the rest of corporate America.
Their outsize influence suggests the economy may be far weaker than surface-level data implies.
The Magnificent 7 — Alphabet (GOOG), Amazon (AMZN), Apple (AAPL), Meta Platforms (META), Microsoft (MSFT), Nvidia (NVDA), and Tesla (TSLA) — have become the dominant drivers of S&P 500 performance.
“If it wasn’t for the Mag 7, earnings consensus for the S&P 500 would be decently negative,” wrote Lance Roberts, chief strategist at RIA Advisors. That, he added, signals “the economy is weaker than headlines suggest.”
Roberts was pointing to fiscal 2026 earnings expectations for the S&P 500. Analysts forecast that the Magnificent 7 will deliver earnings growth of about 2%. Excluding those companies, however, the rest of the index is projected to post a 4% decline.
The gap highlights that corporate earnings — and by extension, the economy — are not as strong as top-line numbers indicate.
Market observers have long warned about the risks of such concentration, but what is less often discussed is how this imbalance distorts earnings growth itself. According to FactSet, the Magnificent 7 posted earnings growth of 27.7% in the first quarter, far outpacing the broader market.
This narrow dependence not only heightens concentration risk in the stock market, but also points to broader economic weakness as corporate earnings lag.
Mag 7 rallies as the economy stalls
The divide between the Magnificent 7 and the broader U.S. economy is becoming increasingly stark. The CNBC Magnificent 7 Index has climbed to record highs, highlighting the outsized performance of Big Tech and helping to lift the S&P 500 toward new peaks.
However, beneath the surface, signs of strain are emerging — particularly in the labor market, where job growth has slowed and unemployment has ticked higher.
The latest jobs report “syncs with our view that the labor market is likely to gradually decelerate in coming months/quarters and continue to look for the unemployment rate to move higher by the end of this year,” wrote Scott Wren, senior global market strategist at Wells Fargo Investment Institute.
Others have gone further. As InvestorsObserver reported, Navy Federal Credit Union’s chief economist described the U.S. economy as facing a “white-collar and blue-collar jobs recession.”
Cracks are also showing in the semiconductor sector, where the fallout from the Trump administration’s trade war continues to weigh. Companies have faced job cuts and squeezed margins as the industry adjusts to tariffs and shifting global supply chains.
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