Semiconductors Overtake Mag 7 In H1: Goldman Believes Investors' Appetite For Big-Tech Is Shrinking Going Into Second Half Of 2026

• Goldman Sachs said investors are reducing exposure to the Magnificent Seven as they favor AI beneficiaries, such as semiconductor companies.
• The bank believes markets are rewarding companies that generate returns from AI investments while questioning those that bear the costs.
• Hyperscalers are pouring hundreds of billions of dollars into data center infrastructure to maintain their dominant positions in the AI race.

Goldman Sachs on Thursday stated that Wall Street's appetite for “Magnificent 7” names has declined heading into the second half of the year.

The bank believes investors are overlooking the blue-chip stock group in favor of beneficiaries of artificial intelligence, i.e., the semiconductor industry.

Goldman’s Take On Tech For H2 2026

Brian Garrett, derivatives specialist at Goldman, centered his thesis on a core point: spending. He believes markets now see companies generating returns from AI investments as attractive, while expressing doubts about those who spend.

"One of the reasons for the decrease in Mag7 exposure seems almost too simple as it's been hiding in plain sight for months," Garrett reportedly said in a note seen by Investing.com. "The market is rightly rewarding the names that earn (capex beneficiaries, semiconductors, etc) while at the same time questioning the names that spend (hyperscalers)."

Hyperscaler Earnings: Seeing Is Believing

Hyperscalers like Google, Meta, Microsoft, and Amazon are pouring hundreds of billions of dollars into data center infrastructure to generate the compute capacity needed and maintain their dominant positions in the AI race.

Goldman now thinks that unless the hyperscalers show even stronger earnings growth, investors are likely to take a more cautious approach to the mega-cap tech names.

Semiconductor Overtakes Mag 7 In H1

The AI infrastructure buildout has resulted in a shortage of chips, especially for memory and storage, forcing companies to raise product prices while they simultaneously seek long-term agreements to ensure a steady supply.

Semiconductor players are bracing for outsized demand that is expected in H2 and have increased their production capacity to address the shortage. Micron this year started manufacturing 1-alpha DRAMs in the U.S., while Applied Materials unveiled a suite of new chip-making tools to help companies boost output, as the industry approaches $1 trillion in revenue.

When looking at the performance so far this year, semiconductors emerge victorious. The Roundhill Magnificent Seven ETF (MAGS) has marginally declined, while the benchmark S&P index has gained just under 10%.

This compares to the 72% surge in the VanEck Semiconductor ETF (SMH), the 99% increase in the iShares Semiconductor ETF (SOXX), and the Roundhill Memory ETF (DRAM), which has more than doubled in value.

For updates and corrections, email newsroom[at]stocktwits[dot]com