Magnificent Seven: Who Cracks First in AI?
The Magnificent Seven diverge as AI spending shifts from valuation boost to cash flow burden. Nvidia's earnings won't reverse the trend, just reveal who can turn AI into real returns.
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If we rewind the clock to one year ago, Wall Street had almost reached a consensus: the larger and more aggressive the capital expenditure on anything AI-related, the deeper the future moat would be. The logic at the time was straightforward—compute determines the ceiling, models decide the winner, and cash flow is merely a temporary sacrifice.
But entering 2026, this very logic is being systematically dismantled by the market itself.
Amazon has officially entered bear market territory, Microsoft became the first among the Mag7 to confirm a bear market, and Meta is just one step away from a technical 20% bear market; meanwhile, Alphabet’s decline has remained notably contained, while Nvidia has been thrust into the “eye of the storm” for virtually every trade.
This is not an ordinary tech-stock pullback—it is a phase-one settlement of the AI investment thesis: for the first time, the market is systematically asking the question—can these unprecedented AI capital expenditures actually translate into verifiable returns?
