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Are calls for “the end of the era of the Big Seven” growing? Investment boss: It may drag down the S&P 500 and the problem has already appeared

2026-07-26·newswire-us-stock-030001
Are calls for “the end of the era of the Big Seven” growing? Investment boss: It may drag down the S&P 500 and the problem has already appeared.

Many market commentators have declared that the "era of dominance" of the Big Seven is over, and Bill Smead, founder and CEO of asset management company Smead Capital Management and a Buffett-style value investor, is the latest. The so-called "Big Seven" refer to Nvidia, Apple, Google parent company Alphabet, Microsoft, Amazon, Meta and Tesla.

Moreover, Smid's thoughts are more pessimistic, believing that the Big Seven may become a "burden" on the S&P 500 Index and drag down the index's performance. Morningstar data shows that the "Smead Value Fund" (SMVLX) he manages has outperformed 98% of similar funds in the past 15 years.

Smeed said in a new interview that the Big Seven stocks are now gradually retreating from the market leadership position. He emphasized that by 2026, it will be obvious that the stocks of the "Big Seven Technology" are no longer in sync with the broader market.

Some companies are investing heavily in artificial intelligence (e.g., Microsoft, Meta, Amazon, and Alphabet), others are benefiting from these investments (e.g., Nvidia), and still others are largely avoiding the technology (e.g., Apple). Some companies have had strong gains so far this year, while others have underperformed.

Overall, they have performed almost flat this year, while the S&P 500 has gained about 10%. Citi says the "Big Seven" are outdated as a proxy for AI and growth trading due to differences in performance, but Smead is more bearish on the group of stocks and their impact on the broader market.

Given that the S&P 500 is highly concentrated in the market's largest stocks - the top 10 stocks currently account for 40% of the index - Smead warned that the rotation of the "Big Seven" will be a drag on the index.

He believes that if investors suddenly lose interest in artificial intelligence trading and hyperscale data center operators invest hundreds of billions of dollars in capital expenditures on infrastructure construction, the index will be affected, which will prompt investors to sell the index, thus forming a vicious cycle.

That process may have already begun, as both hyperscale data center and chip stocks have declined in recent weeks. "It looks like the S&P 500 is already in trouble," Smead said.

"The value index has outperformed the S&P 500." “The biggest risk to the index is that every 10 years there will be an almost complete turnover of the 10 largest companies in the world by market capitalization,” he continued. “We have now begun that process.” Smead further said he expects the S&P 500 to fall over the next five to 10 years.

Additional data supports Smead's view that the market's largest stocks often fail to maintain market leadership positions. According to a Goldman Sachs report released in July, only six of the top 10 companies since 1990 remain in the top 10 five years later.

Research from the CFA Institute shows that of the top 10 stocks in 2009, only two, Microsoft and Apple, are still in the top 10. History also shows that periods of high concentration like today can have serious consequences for index-level returns, CFA Institute said.

The agency pointed out in a 2025 report: "Periods of high concentration and relative overvaluation not only lead to increased market volatility, but also lead to disappointing long-term returns, often referred to as 'lost decades.' Throughout market history, there have been many 'lost decades,' and most of them occurred after periods of high market concentration and relative overvaluation."

#Stocks #Nvidia #Tesla #Apple #Microsoft

Full text

Are calls for “the end of the era of the Big Seven” growing? Investment boss: It may drag down the S&P 500 and the problem has already appeared

[The call for “the end of the era of the Big Seven” is growing? Investment boss: It may drag down the S&P 500 and the problem has already appeared! ] Many market commentators have declared that the "era of dominance" of the Big Seven is over, and Bill Smead, the founder and CEO of the asset management company Smead Capital Management and a Buffett-style value investor, is the latest.

Many market commentators have declared that the "era of dominance" of the Big Seven is over, and Bill Smead, founder and CEO of asset management company Smead Capital Management and a Buffett-style value investor, is the latest. The so-called "Big Seven" refer to Nvidia, Apple, Google parent company Alphabet, Microsoft, Amazon, Meta and Tesla. Moreover, Smid's thoughts are more pessimistic, believing that the Big Seven may become a "burden" on the S&P 500 Index and drag down the index's performance. Morningstar data shows that the "Smead Value Fund" (SMVLX) he manages has outperformed 98% of similar funds in the past 15 years. Smeed said in a new interview that the Big Seven stocks are now gradually retreating from the market leadership position. He emphasized that by 2026, it will be obvious that the stocks of the "Big Seven Technology" are no longer in sync with the broader market. Some companies are investing heavily in artificial intelligence (e.g., Microsoft, Meta, Amazon, and Alphabet), others are benefiting from these investments (e.g., Nvidia), and still others are largely avoiding the technology (e.g., Apple). Some companies have had strong gains so far this year, while others have underperformed. Overall, they have performed almost flat this year, while the S&P 500 has gained about 10%. Citi says the "Big Seven" are outdated as a proxy for AI and growth trading due to differences in performance, but Smead is more bearish on the group of stocks and their impact on the broader market. Given that the S&P 500 is highly concentrated in the market's largest stocks - the top 10 stocks currently account for 40% of the index - Smead warned that the rotation of the "Big Seven" will be a drag on the index. He believes that if investors suddenly lose interest in artificial intelligence trading and hyperscale data center operators invest hundreds of billions of dollars in capital expenditures on infrastructure construction, the index will be affected, which will prompt investors to sell the index, thus forming a vicious cycle. That process may have already begun, as both hyperscale data center and chip stocks have declined in recent weeks. "It looks like the S&P 500 is already in trouble," Smead said. "The value index has outperformed the S&P 500." “The biggest risk to the index is that every 10 years there will be an almost complete turnover of the 10 largest companies in the world by market capitalization,” he continued. “We have now begun that process.” Smead further said he expects the S&P 500 to fall over the next five to 10 years. Additional data supports Smead's view that the market's largest stocks often fail to maintain market leadership positions. According to a Goldman Sachs report released in July, only six of the top 10 companies since 1990 remain in the top 10 five years later. Research from the CFA Institute shows that of the top 10 stocks in 2009, only two, Microsoft and Apple, are still in the top 10. History also shows that periods of high concentration like today can have serious consequences for index-level returns, CFA Institute said. The agency pointed out in a 2025 report: "Periods of high concentration and relative overvaluation not only lead to increased market volatility, but also lead to disappointing long-term returns, often referred to as 'lost decades.' Throughout market history, there have been many 'lost decades,' and most of them occurred after periods of high market concentration and relative overvaluation."

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