Magnificent Seven lose edge as AI funds shift to memory chips

The seven leading U.S. tech giants, often called the Magnificent Seven, saw their index rise just 1.1% in 2026 while the Nasdaq‑100 gained nearly 18%, reflecting investors’ move away from these firms toward the AI‑fuelled memory‑chip sector. Large inflows into memory‑chip vehicles – roughly $9.3 billion into the Roundhill Memory ETF and the launch of new memory‑chip funds such as Amundi’s Global Memory Chips ETF – contrasted with about $786 million withdrawn from the Roundhill Magnificent Seven ETF.

Semiconductor stocks experienced a sharp sell‑off after Samsung’s preliminary results hinted at a 19‑fold rise in operating profit but fell short of market expectations, prompting broader concerns about the sustainability of AI‑driven chip spending. The Philadelphia Semiconductor Index fell more than 11% after a 22% intraday drop in a leveraged semiconductor ETF, while major chip makers like Intel, AMD and Micron posted double‑digit declines.

Investment banks such as Morgan Stanley note a rotation from chip makers to the “hyperscalers” – large cloud providers and data‑centre operators – and to other sectors including consumer discretionary, transportation and biotech, as the AI trade matures. Analysts also point to a shift in valuation drivers, from speculative growth to earnings performance, as inflation and tighter monetary policy cap the upside for high‑valuation assets.

Overall, the AI trade is unwinding, with capital flowing from the original chip‑centric bets to memory‑chip producers and broader AI infrastructure players.