It was May 2023 when Bank of America’s Michael Hartnett took inspiration from the Wild West, coining the phrase “Magnificent Seven” for a group of American companies that have proved to be the main driver of the stock market during an AI boom.
And while the Mag Seven—Apple, Amazon, Alphabet, Meta, Microsoft, Nvidia, and Tesla—remain dominant forces in the asset class, Hartnett now says that the very thing which once made them a portfolio “must” is now a vulnerability.
Fiscal excess led investors to put their money toward something more sustainable, BofA’s chief investment strategist suggested in a recent episode of the Master Investor podcast. He said, “To a certain extent, the rise of the Mag Seven was because nobody wanted to hold government bonds: ‘I don’t want the government balance sheet. They spend like drunken sailors. Why do I want to lend to them?…I’d rather put my money with companies that have tons of cash and…don’t spend any of it.’ That was the Mag Seven,” Hartnett said.
However, AI hyperscalers have now begun spending—to a breathtaking degree. Global AI investment is expected to exceed $1 trillion in 2026, per Goldman Sachs’ latest calculations, with JPMorgan Chase CEO Jamie Dimon expecting hyperscaler AI spending will hit the $1 trillion mark next year.
