Here's a sentence you haven't heard in a while: the Magnificent Seven are dragging down the market. For roughly three years, these mega-cap tech darlings have been the entire story of the equity rally. When they went up, everything went up. When they stumbled, the whole market felt it. But in early 2026, something different is happening. They're still stumbling, but the rest of the market is shrugging and moving on without them.

Through January 14, five of the seven members are sitting in the red. Nvidia Corp. (NVDA), Apple Inc. (AAPL), Microsoft Corp. (MSFT), Meta Platforms Inc. (META), and Tesla Inc. (TSLA) have all slipped lower to start the year.

Only Alphabet Inc. (GOOGL) (GOOG) and Amazon.com Inc. (AMZN) managed to buck the trend and post gains.

On average, the group is down 1.7% year-to-date, while the Roundhill Magnificent Seven ETF (MAGS) has fallen 2.5% during the same stretch.

From Market Heroes to Market Anchors

For most of the past three months, the Magnificent Seven kept outperforming the equal-weighted market. That dynamic flipped as the calendar turned to 2026, and the reversal has been swift.

This underperformance from tech's elite has weighed on the broader market, at least the version most people watch. The S&P 500 is barely positive so far in 2026, up just 0.7%. That's what happens when your index is basically a weighted average where seven stocks call most of the shots.

The Magnificent Seven still account for more than 35% of the S&P 500's total weighting. When you concentrate that much influence in so few names, their bad days become everyone's problem. But here's where it gets interesting: that concentration effect is also hiding some real strength underneath.

An investor holding an equal-weighted version of the S&P 500, such as the Invesco S&P 500 Equal Weight ETF (RSP), would be up 3.3% year-to-date. That's nearly five times better than the cap-weighted index. The market isn't weak. It's just that the biggest stocks are no longer doing the heavy lifting.

The Great Rotation Into Value

"The Nasdaq 100 took a knock at the end of last year as investors cut their exposure to growthy tech names, while reinvesting the proceeds in overlooked value plays," said David Morrison, analyst at Trade Nation.

"This has broadened out equity exposure and is a healthy development for the market," he added.

The rotation is showing up loud and clear across style factors. Value stocks have been decisively outperforming growth in recent months, a dramatic shift from the growth-dominated rally of the past few years.

The Vanguard Value ETF (VTV) has risen by 7% since mid-October, outperforming the Vanguard Growth ETF (VUG) by 5 percentage points. That's not a subtle difference. It's a wholesale change in what investors want to own.

Is Big Tech Just Taking a Breather?

Some analysts aren't ready to write off the Magnificent Seven just yet. They see this recent pullback as a temporary pause rather than the beginning of a longer-term breakdown, especially with fourth-quarter earnings reports about to hit.

According to Jeff Buchbinder, chief equity strategist at LPL Financial, artificial intelligence remains the dominant force behind earnings growth, and that story is far from over.

AI-related names, including the Magnificent Seven, are expected to drive roughly 80% of the S&P 500's projected 8% earnings growth in the fourth quarter, based on current estimates. The technology sector alone is forecast to grow earnings by more than 25%, with final results potentially pushing growth above 30%.

"Slicing this another way, the biggest six technology companies, i.e., the Mag Seven excluding Tesla (TSLA), are expected to drive over 60% of S&P 500 earnings growth for the quarter by growing earnings an average of 19%," Buchbinder said.

That pace would more than double what the remaining 493 companies in the index are likely to deliver. So even if these stocks are stumbling on price, they're still absolutely crushing it on fundamentals.

What Happens Next for This Bull Market?

Earnings growth beyond mega-cap tech has quietly improved. The remaining S&P 493 grew profits 11.8% in the third quarter of 2025 and could post double-digit growth again, according to LPL Financial. That's solid, but it still doesn't match what the big tech names are doing.

That earnings gap explains why LPL Financial still favors large growth stocks over large value, even as market leadership begins to shift in the near term.

Whether this rotation has staying power depends largely on what happens in Washington. Cyclical value stocks can keep gaining ground only if fiscal policy adds fuel while technology cools, according to Buchbinder.

He expects that additional stimulus tied to the One Big Beautiful Bill Act may extend the rotation, with industrial stocks emerging as a standout theme for the year ahead. If Washington delivers on spending and infrastructure, the stocks that benefit most won't be the ones building AI models. They'll be the ones building actual things.

For now, the Magnificent Seven are no longer carrying the market alone. Wall Street is getting its first real look at what a rally looks like when it doesn't depend on tech giants leading every single step. Whether that's a healthy diversification or a warning sign will depend on whether those tech earnings can reignite momentum when they start reporting. But at least for the moment, the market has discovered it can walk without its usual crutches.