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Magnificent 7 Lags S&P 500 as Microsoft, Tesla Drag Down Group's Performance

ENTHMSVIIDZHZH-TWJAKOHI
Jul 16, 20262 min read
Magnificent 7 Lags S&P 500 as Microsoft, Tesla Drag Down Group's Performance

Summary

The so-called 'Magnificent 7' stocks are underperforming the broader S&P 500 year-to-date, as steep declines in Microsoft and Tesla offset strong performance from Apple and Alphabet, signaling a potential shift in market leadership.

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Background

The seven technology stocks that have dominated market returns are underperforming the broader S&P 500 in 2026, a development driven by a sharp divergence within the group. An equal-weighted average of the 'Magnificent 7' shows a year-to-date gain of approximately +3.7%, lagging the S&P 500's +9.92% advance, according to an analysis by Investing.com.

A Tale of Two Tapes

The group's collective underperformance masks a split between strong performers and significant laggards. While Apple and Alphabet have posted double-digit gains, steep losses in Microsoft and Tesla are weighing heavily on the average.

Here is a breakdown of year-to-date performance as of July 16, 2026:

  • Apple (AAPL): +20.70%
  • Alphabet (GOOGL): +16.89%
  • Amazon (AMZN): +9.84%
  • NVIDIA (NVDA): +9.71%
  • Meta (META): +1.42%
  • Tesla (TSLA): -14.15%
  • Microsoft (MSFT): -18.64%

Heavy Spending and Competition Weigh on Laggards

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Microsoft has emerged as the biggest drag on the group, with its stock down -18.64% for the year. The decline follows the company's projection of $190 billion in AI-related capital expenditures for 2026, a figure that far exceeded analyst expectations and raised concerns about near-term profitability.

Tesla is also facing headwinds, with its shares falling -14.15% YTD. Despite reporting a record 480,126 vehicle deliveries in the second quarter, the stock fell as rival BYD reclaimed the global lead in battery-electric vehicle sales with 557,090 deliveries in the same period.

Macro Pressures and Market Rotation

The underperformance is also occurring amid a shifting macroeconomic backdrop. A more hawkish stance from the Federal Reserve under new Chair Kevin Warsh is pressuring high-valuation technology stocks, as higher interest rates reduce the present value of their future earnings.

Simultaneously, the market is showing signs of broadening leadership beyond mega-cap tech. The S&P 500's strength reflects a rotation into other sectors, including financials, healthcare, and industrials. Investors will be closely watching upcoming earnings reports from Alphabet, Amazon, and Meta for indications of whether massive AI investments are beginning to translate into revenue growth.

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