Mag 7 divide could widen in 2026 as Amazon, Meta, Apple lag year-to-date

Leslie Picker (Reporter) 00:00.000

Members of the Magnificent Seven are no longer trading as a team and the gaps could widen in 2026. McKenzie Segalos joins us now with more. Hey Mac.

Mackenzie Sigalos (Business News Reporter) 00:09.400

Hey Leslie. This was the year the market stopped trading the Mag 7 as a monolith and started separating winners from losers based on who can actually monetize their AI bets. Let's start with the winners. Alphabet with a 60% point lead has StreetCred across the stack. It's AI

Mackenzie Sigalos (Business News Reporter) 00:24.680

chip, cloud distribution, and then it's LLM Gemini. It has been topping key benchmark tests. Nvidia is up more than 40% and now the world's most valuable public company because it remains the backbone of this year's record-breaking data center build out. Now to the laggards,

Mackenzie Sigalos (Business News Reporter) 00:40.160

Amazon still has the biggest cloud business, but AWS is growing more slowly than Azure and Google Cloud. The bet is that its in-house AI chip trainium wins on cost, but adoption hasn't matched the momentum that investors see in Google's custom chip ecosystem. Now, unlike its

Mackenzie Sigalos (Business News Reporter) 00:55.960

hyperscaler peers, Meta does not have a cloud service and lacks the clear revenue story tied to its AI investment. They say if the benefit shows up and adds better targeting, better performance, but that's a harder ROI story for the market to underwrite. And then there's Apple.

Mackenzie Sigalos (Business News Reporter) 01:11.440

It's largely been sitting out the infrastructure battle, betting that distribution wins by owning where consumers actually use AI. And it may be near the bottom now, but if model quality keeps converging, distribution could matter a lot more than who trained the best LLM. Guys?

Leslie Picker (Reporter) 01:26.880

So then Mac, you think the the gap will widen into next next year. Why is that? Um, what is kind of priority number one for the market to see from each of these next year that could kind of cause that fracture to extend even further?

Mackenzie Sigalos (Business News Reporter) 01:41.440

It It all has to do with the CapEx bend. It top $400 billion dollars for the top hyperscalers this year. 75% of that will go into AI infrastructure build next year. It's going to top $600 billion according to some estimates. And you've got Apple at the other end of the spectrum

Mackenzie Sigalos (Business News Reporter) 01:57.640

spending around $3 billion in its most recent quarter and with that points to, is that if they're going to be spending at this magnitude and taking on a lot of debt to to facilitate that build, they're going to want to see a return there. And that's why Google is outperforming

Mackenzie Sigalos (Business News Reporter) 02:10.440

because of the fact that it has a really competitive cloud business. It's coming up. People are very excited about its chip program. So that spend seems worth it when they're landing new cloud contracts with the likes of Meta and Anthropic. Whereas you're looking at forward

Mackenzie Sigalos (Business News Reporter) 02:23.800

projections of revenue and you've got Amazon lagging Microsoft there. So Azure's got a $400 billion dollar future performance obligation lineup versus $200 billion for Amazon that shows where enterprises are betting.

Leslie Picker (Reporter) 02:38.560

Right, just a greater microscope again on that ROI component. Thank you, McKinsey. Appreciate it.