Weakness in the so-called “Magnificent Seven” could signal a “sea change” from U.S. tech stock dominance, says a senior economist at the world’s second-largest asset manager. It’s a trend that could benefit listings on the Toronto Stock Exchange, according to Vanguard Group’s Kevin Khang.

Speaking with reporters at Vanguard’s downtown Toronto office on Wednesday, Khang spoke about how artificial intelligence (AI) is causing a “regime change” for global productivity and economic growth.

Since 2023, this discussion has mainly translated to the stock market via the “Magnificent Seven” or Mag 7 cohort — Alphabet (GOOG)(GOOGL), Amazon (AMZN), Apple (AAPL), Meta Platforms (META), Microsoft (MSFT), Nvidia (NVDA), and Tesla (TSLA). However, last year, the Bank of America strategist who coined the term warned about this group becoming the “Lagnificent 7,” as AI spending peaks.

Now, Khang, Vanguard’s head of global economic research, says he senses that a “sea change” is underway among top-performing stocks.

“We say Magnificent Seven, but it’s really starting to show some dispersion,” he said.

“We think that there is actually a lot of hype in the current U.S. equity market that they (companies) may deliver on,” Khang added. “We don’t see that as a baseline. We think there’s actually, potentially quite a bit of disruption that’s awaiting the makeup of the U.S. equity market going forward.”

Known for pioneering low-cost index funds in the 1970s, Vanguard says its assets under management top US$10 trillion. It’s the second-largest global firm by this measure, behind BlackRock (BLK) with US$14 trillion in assets.

“Markets are starting to differentiate. If you look at the leaderboard in the U.S. the last three months, it’s not any of those [Magnificent Seven] companies; it’s actually industrials, materials, and natural resources. It’s those companies and energy,” Khang said.

“One could surmise that some of the similar dynamics will be at play for other stock markets, including Canada.”

In 2025, the S&P/TSX Composite index (^GSPTSE) returned about 28 per cent, its strongest performance since 2009. The S&P 500 (^GSPC) rose nearly 17 per cent.

Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on X @jefflagerquist.