Investor enthusiasm for artificial intelligence has eased after driving major U.S. equity gains over the past three years, with some analysts pointing to signs of fatigue and a shift toward broader market exposure.
Shares of the so-called Magnificent Seven — including Nvidia Corp., Microsoft Corp., Apple Inc., Alphabet Inc., Meta Platforms Inc., Broadcom Inc., and Oracle Corp. — rose sharply following the 2022 launch of OpenAI’s ChatGPT. However, some investors are now turning to the remaining 493 companies in the S&P 500, particularly those positioned to benefit from potential economic growth.
“I call it ‘AI fatigue,’” said Ed Yardeni, president and chief investment strategist at Yardeni Research. “I’m tired of it and I suspect a lot of other people are sort of wary of the whole issue.”
Since the S&P 500’s peak in late October 2024, Bloomberg’s index for the Magnificent Seven declined 2% through Monday’s close, while the other 493 S&P stocks collectively rose 1.8%.
The Defiance Large Cap Ex-Magnificent Seven exchange-traded fund (ETF), launched at the end of 2024, experienced six consecutive months of inflows to close the year, with December activity quadrupling from November. The fund, trading under the ticker XMAG, rose 15% for the year, mostly in the second half.
Yardeni described the 2025 performance of the S&P 493 as “impressive,” citing sustained profit margins despite political and economic developments, including the creation of the Department of Government Efficiency, President Donald Trump’s tariff policies, and labor market concerns.
If U.S. growth accelerates, cyclical and growth-oriented sectors may benefit. Financial firms such as JPMorgan Chase & Co. and Bank of America Corp. could gain, along with consumer discretionary companies like Nike Inc. and Booking Holdings Inc., as consumer sentiment improves.
