Weakness in the so-called \u201cMagnificent Seven\u201d could signal a \u201csea change\u201d from U.S. tech stock dominance, says a senior economist at the world\u2019s second-largest asset manager. It\u2019s a trend that could benefit listings on the Toronto Stock Exchange, according to Vanguard Group\u2019s Kevin Khang.<\/p>\n
Speaking with reporters at Vanguard\u2019s downtown Toronto office on Wednesday, Khang spoke about how artificial intelligence (AI) is causing a \u201cregime change\u201d for global productivity and economic growth.<\/p>\n
Since 2023, this discussion has mainly translated to the stock market via the \u201cMagnificent Seven\u201d or Mag 7 cohort \u2014 Alphabet (GOOG<\/a>)(GOOGL<\/a>), Amazon (AMZN<\/a>), Apple (AAPL<\/a>), Meta Platforms (META<\/a>), Microsoft (MSFT<\/a>), Nvidia (NVDA<\/a>), and Tesla (TSLA<\/a>). However, last year, the Bank of America strategist who coined the term warned about this group becoming the \u201cLagnificent 7<\/a>,\u201d as AI spending peaks.<\/p>\n Now, Khang, Vanguard\u2019s head of global economic research, says he senses that a \u201csea change\u201d is underway among top-performing stocks.<\/p>\n \u201cWe say Magnificent Seven, but it’s really starting to show some dispersion,\u201d he said.<\/p>\n \u201cWe think that there is actually a lot of hype in the current U.S. equity market that they (companies) may deliver on,\u201d Khang added. \u201cWe 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.\u201d<\/p>\n Known for pioneering low-cost index funds in the 1970s, Vanguard says its assets under management top US$10 trillion. It\u2019s the second-largest global firm by this measure, behind BlackRock (BLK<\/a>) with US$14 trillion in assets.<\/p>\n \u201cMarkets 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,\u201d Khang said.<\/p>\n \u201cOne could surmise that some of the similar dynamics will be at play for other stock markets, including Canada.\u201d<\/p>\n In 2025, the S&P\/TSX Composite index (^GSPTSE<\/a>) returned about 28 per cent, its strongest performance since 2009. The S&P 500 (^GSPC<\/a>) rose nearly 17 per cent.<\/p>\n Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on X @jefflagerquist<\/a>.<\/p>\n