Magnificent Seven Leadership In Question As MAGS ETF Stumbles: Is AI Losing Steam?

The once-unshakable dominance of the Magnificent Seven (or Mag 7) stocks is under scrutiny.

Stretched valuations and artificial intelligence investment concerns are weighing on mega-cap tech. The Bloomberg Mag Seven Index, an equal-weighted basket of these high-flyers, has officially entered correction territory. It’s down 10% year-to-date, notes Adam Turnquist, Chief Technical Strategist at LPL Financial.

Technical Breakdown: Key Support Levels Under Threat

According to Turnquist, the group has violated a key uptrend from October 2023 and is now testing critical support at the 200-day moving average. A breakdown from here could open the door to deeper losses, potentially revisiting last August's highs or lows.

Meanwhile, the Magnificent Seven's relative strength versus the equal-weight S&P 500 is also at a pivotal juncture—if support doesn't hold, Turnquist warns that their leadership status may be in jeopardy.

Read Also: S&P 500 Selloff Spikes Investor Pessimism: Bearish Sentiment Hits 30-Month High, But This Expert Recommends Investors To ‘Stay Strong And Not Panic Sell'

MAGS ETF Signals Strong Bearish Momentum

The Roundhill Magnificent Seven ETF MAGS, a fund tracking the group, is reflecting the broader weakness. MAGS is down 8.07% year-to-date and 9.29% in the past month.

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Technicals paint a bleak picture, with the stock trading below its eight-day, 20-day and 50-day simple moving averages, signaling strong bearish momentum.

However, some buying pressure is emerging, with the 200-day simple moving average at $48.76 acting as potential support.

The China Factor: AI Competition Heats Up

Adding to the uncertainty is China's DeepSeek AI platform, which raises fresh questions about whether American tech giants can maintain their AI supremacy.

With earnings growth facing new challenges as these companies shift from asset-light to asset-heavy models, investors are left wondering: Is this just a pullback, or has the Mag Seven's reign finally run its course?

Read Next:

• From ‘Mag7 To Meh7:’ No Tech Giant Ranks Among S&P 500’s Top 50 Performers In 2025, Experts Say ‘Struggle… Is Justified’

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