Will the Magnificent Seven Reignite? 'Ascending Triangle' Signal Emerges, Pointing to Potential Surge in Big Tech Stocks

Fundstrat believes the 'Magnificent Seven' (Magnificent Seven) are approaching a crucial breakout point, and once a technical upward confirmation is achieved, it could spark a powerful surge in large technology stocks.

Mark Newton, Head of Technical Strategy at Fundstrat, stated in his latest report that the ETF for the seven major US equities (MAGS-US) is currently forming an 'ascending triangle' pattern and is nearing the stage of breaking out of this formation, signaling a potential upward breakout and a new all-time high.

The Magnificent Seven include Alphabet (GOOGL-US), Amazon (AMZN-US), Apple (AAPL-US), Meta (META-US), Microsoft (MSFT-US), NVIDIA (NVDA-US), and Tesla (TSLA-US), collectively accounting for approximately 31% of the total market capitalization of the S&P 500 Index.

For years, these mega-cap tech companies have often been viewed as a single bloc by the market, serving as a key benchmark for investors seeking exposure to America's top-tier technology firms, despite each company operating across different industries.

For example, Amazon primarily focuses on retail and cloud computing, Apple centers on consumer electronics and services, Tesla manufactures electric vehicles, and Meta relies heavily on social media advertising revenue.

However, over the past few months, the performance of the Magnificent Seven has diverged significantly, with each company facing distinct market narratives. Tesla has been dragged down by declining EV sales; Microsoft has faced pressure amid concerns that artificial intelligence (AI) might disrupt the software industry; Meta was also suppressed as investors struggled to quantify the benefits of its massive AI capital expenditures.

In recent weeks, many of these concerns have gradually subsided. For instance, Meta's announcement of its personal AI agent, Muse, received positive responses from investors, driving the company's stock price up 22% within a month.

Market fears about AI disrupting the software industry have also cooled, and combined with strong performance from Microsoft's Azure cloud business, Microsoft's stock has risen 28% over the past three months.

Stock prices of hyperscale cloud providers like Amazon and Alphabet had previously fluctuated with market sentiment around the AI boom, but the outlook has turned more optimistic recently, further boosting these individual stocks.

Apple had lagged behind other tech giants due to its delayed and unclear AI strategy. However, market sentiment has now shifted. Because Apple has not made aggressive AI capital investments, and last week's launch of its foldable iPhone received favorable market feedback, it is now seen as one of the winners.

Apple's stock price has risen 11% over the past three months.

As for NVIDIA, the largest by market capitalization, its stock has already risen 13% year-to-date. This AI chip giant continues to deliver financial results and forecasts that exceed market expectations.

Tesla, however, stands out as the clear underperformer among the Magnificent Seven, with its stock down 20% year-to-date. Nevertheless, this has not prevented the US Large Cap 7 Giants ETF (MAGS-US) from rising, which has still gained over 4% in the past month.

Newton stated that MAGS-US is right at the edge of a breakout, and the technical picture looks very positive, especially as individual stocks like Apple, Alphabet, and Meta have shown clear strength in recent days.

He further noted that, in comparison, these large tech stocks are now even more attractive than many semiconductor stocks. While many chip stocks are gradually stabilizing, their rebound is still in the early stages—similar to the situation with software stocks earlier this year.

Newton believes MAGS-US is very close to breaking above the $70.80 level set on September 3. Once it surpasses this price, it could propel the Nasdaq 100 Index and large tech stocks into a strong rally over the coming weeks.

He said that although NVIDIA and Amazon have slightly weakened in recent days, their technical indicators have not deteriorated enough to damage the overall trend. Therefore, they still have the potential to regain strength alongside the broader tech ETF's upward breakout—and he believes this breakout is imminent.