What would be the S&P500 earnings growth versus Mag 7?

With about two-thirds of the reporting season behind us, one thing is clear: The growth figures wouldn’t look as good as they do without the “Magnificent Seven.”

Goldman Sachs’ chief U.S. equity strategist, David Kostin, estimated the group’s second-quarter earnings growth was 26%. That figure includes estimates for Nvidia, which reports results later this month. Other Mag 7 members: Meta Platforms, Amazon, Tesla, Alphabet, Microsoft, and Apple

• have already announced results for the second quarter.

The rest of the S&P 500 isn’t doing so well. Kostin noted that the annualized returns for all other stocks in the benchmark index are just 4%. That includes results from companies that have reported results and estimates from those that haven’t.

“The results so far also reflect the continued outperformance of large-cap technology stocks, which represent one of the key sources of upside risk to S&P 500 earnings forecasts.”

This discrepancy is another sign that investors are increasingly focusing on just a handful of stocks. In fact, these names have proven resilient despite rising U.S. tariffs and recent shaky employment data.

Six of the Mag 7 stocks — Meta, Microsoft, Nvidia, Tesla, Amazon and Alphabet — are higher since April 2, when President Donald Trump announced a sharp increase in tariffs on imported goods. Those gains helped the S&P 500 recover from near-bear market territory to trade back at record highs. Of the group, only Apple has declined.

The problem with such concentration is that if any of these seven names start to falter, they will bring down the broader market.

“We believe the S&P 500 is trapped in the paradox of a bubble versus an AI-induced bull market,” Citigroup strategist Scott Kronert wrote in a note Friday. “Our bias is toward the latter. But the path to a structural bull market is not straight.”

“The last two years of this bull trend have been led by the direct beneficiaries of the development of artificial intelligence capabilities. This will likely continue for the foreseeable future. But eventually, a transition will need to occur, where technology/AI users will capitalize on the current promise of AI through more sustainable growth and profitability metrics.”