Citi strategists have stated that the "Magnificent Seven" is no longer a valid construct for evaluating large-cap growth dynamics. They argue that the reign of these high-flying tech titans is over, pointing to their recent underperformance compared to other stocks. For example, a weighted index of the top 25 S&P 500 contributors is up 7% year-to-date, while the Mag Seven gained only 2%.
The Mag Seven's market dominance has diminished, with their average pairwise correlation falling to 0.27 on a three-month rolling basis, significantly down from a peak of 0.78 in mid-2025. This divergence is also evident in their financial profiles; their price-to-earnings multiples now range from 19.7x to 184.8x, and 2026 earnings per share growth expectations vary from 14% to 85%. Microsoft, the worst performer among the group in 2026, is down 17%, while Alphabet and Apple have seen gains of 12.4% and 14.8% respectively.
Citi now recommends focusing on a broader "growth cluster" of stocks, which they believe better reflects the current market dynamics. This cluster, which Citi has refined, represents about half of the S&P 500's total market capitalization and contributes approximately 48% of the S&P 500's expected earnings over the next 12 months. This group gained 25% in the second quarter and is up 12% for the year, outperforming the Mag Seven's 15% quarterly gain and 10% year-to-date gain. The bank notes that even a "Mag 10" would miss significant earnings contributors like Intel, Applied Materials, and Lam Research Corp.
