Nvidia's Earnings Are Almost Here. Here's the State of the Magnificent 7 Stocks.

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Can Nvidia keep the Big AI trade alive?

That’s the question of the week. The last of the Magnificent 7 to report its latest quarterly results is due to deliver after tomorrow’s closing bell, an event that could determine the next move for the mega-cap tech trade.

The numbers are landing as the year has started quietly for the market powerhouses: Apple (AAPL), Alphabet (GOOGL), Microsoft (MSFT), Amazon (AMZN), Meta (META) and Tesla (TSLA) are all in the red so far this year, while Nvidia (NVDA) is up just a bit over 2%.

The good news is that the other 493 companies in the S&P 500 have been working for investors, with a few AI-adjacent stocks, energy and the industrials sector leading the broad market. The bad news is that the big weightings of the Mag 7 are dragging down some returns: The Invesco S&P 500 Equal Weight ETF (RSP), which weights each of the index constituents evenly instead of by their market capitalizations, is up more than 5% year-to-date, while the market-cap weighted SPDR S&P 500 ETF (SPY) is about flat.

Fears about the future of AI have rattled markets in recent weeks. Investors have traded on “what if” scenarios, research reports and corporate announcements seen as threatening firms or industries. Yesterday, a viral Citrini report warning of an AI-fueled recession and stock-market crash weighed on software stocks as well as those of big tech firms.

The AI trade is alive, but appears to have broadened out to other parts of the market, “associated mostly with the physical and analog world rather than the virtual and digital world” Ed Yardeni of Yardeni Research wrote earlier this week in a note titled the “A Loopy Stock Market.”

Investors have this year been pickier about investing in tech dips and are piling into value stocks instead of growth. Meanwhile, the energy, materials, and industrials sectors are up at least 14% year-to-date compared to a decline for information technology, according to State Street Investment Management’s sector tracker.

That doesn’t mean investors are done with AI, according to Yardeni. “Much of the AI capital spending boom will boost demand for oil and gas, electricity, materials, capital equipment, and real estate,” he wrote.

Fund managers are more anxious than ever about hyperscalers’ investments in AI and are looking for more concrete signs that they’re delivering; Agentic tools from Anthropic and other organizations have amplified fears of a so-called “Saaspocalypse,” dragging down software stocks and those of other companies seen as having vulnerable business. Some of the aforementioned sectors, meanwhile, may also look attractive to investors because companies in them pay dividends, which can look more valuable as Treasury yields have fallen in recent weeks.

Nvidia’s earnings report—and especially its outlook— could help renew enthusiasm for hyperscalers. Historically, the earnings of the Mag 7 have drawn investors in, though their estimated profit growth has been gradually converging with the rest of the S&P 500 companies, according to FactSet’s John Butters.

The Big Tech companies’ projected 2026 earnings growth rate is about 23% compared to the 493 S&P 500’s 12%, according to data compiled by FactSet. “While the ‘Magnificent 7’ companies are still expected to report higher earnings growth than the other 493 companies in 2026, the gap is expected to decrease slightly relative to 2025,” Butters told Investopedia via email.