A sharp rotation away from Big Tech this year has weighed heavily on the broader market, raising concerns about leadership within the S&P 500.
The Roundhill Investments Magnificent Seven ETF (MAGS) — which tracks giants including Apple, Microsoft, Alphabet, Nvidia, Amazon, Tesla and Meta Platforms — is down 6.7% in February, on track for its weakest month since last March.
The selloff has erased roughly $1.26 trillion in market value from the group this year, underscoring their outsized influence. Analysts note that if the Magnificent Seven fall 5%, the rest of the S&P 500 would need to rise nearly 3% just to offset the drag.
Although MAGS rebounded 0.7% on Wednesday — slightly outperforming the S&P 500’s 0.6% gain — it remains under pressure. The ETF is hovering just above its 200-day moving average, a key technical level that traders are closely watching for signs of further downside.
Investor sentiment has cooled, with more than $300 million in outflows this month. While some strategists argue the AI-driven buildout is not a bubble and see opportunity in the pullback, the lack of consistent leadership from Big Tech could continue to limit upside for the broader index.
For now, markets remain volatile as investors reassess winners and losers in the AI trade.
Frequently Asked Questions
Why are Big Tech stocks under pressure this year?
Investors have rotated away from mega-cap technology stocks after a strong AI-driven rally last year. Profit-taking, valuation concerns, and shifting capital into other sectors have triggered a sharp pullback in the so-called Magnificent Seven.
What is the Roundhill Magnificent Seven ETF (MAGS)?
The Roundhill Investments Magnificent Seven ETF (MAGS) tracks seven major U.S. tech leaders: Apple, Microsoft, Alphabet, Nvidia, Amazon, Tesla, and Meta Platforms. It provides concentrated exposure to these market-moving stocks.
How does weakness in Big Tech affect the S&P 500?
The Magnificent Seven carry significant weight in the S&P 500. If they decline sharply, the broader index struggles to advance unless other sectors post strong gains. Their size makes them key drivers of overall market performance.
Why is the 200-day moving average important?
The 200-day moving average is a widely watched technical indicator. If MAGS closes below this level, it could signal further downside momentum and potentially trigger additional selling pressure from technical traders.
Is this selloff a warning sign or a buying opportunity?
Opinions are divided. Some analysts see the pullback as healthy consolidation after an AI-fueled rally and a potential buying opportunity. Others caution that sustained weakness in Big Tech could limit broader market gains in the near term.
