The New Magnificent 7 and AI's Next Frontier

The AI revolution is no longer confined to the original Magnificent 7. As the sector evolves, a new cohort of companies is emerging as the driving force behind the next wave of innovation and growth. Investors who cling to the old guard risk missing out on the most dynamic opportunities in artificial intelligence. Let's break down why the AI trade is shifting-and how to position your portfolio for the future.

The Indices Are Speaking: A Broader AI Story

, outpacing both the Magnificent 7 and the Bloomberg World Index. This outperformance is no accident. The index's broader exposure to sectors and geographies-spanning AI application software, hyperscalers, and semiconductors-has created a more balanced and resilient portfolio. Similarly, the Cboe Magnificent 10 Index (MGTN Index), which expands the original seven to include AI-focused players like Broadcom (AVGO), Palantir (PLTR), and Advanced Micro Devices (AMD), reflects the market's recognition of a new guard.

Fidelity International's analysts are bullish, arguing that the AI stock rally is far from a bubble. They point to surging spending plans and rapid user adoption as tailwinds, even as volatility rises according to Fidelity analysts. The Cboe Volatility Index (VIX) has climbed above 20, signaling growing unease, but Fidelity insists this is a sign of a maturing market, not a collapse according to Fidelity analysts.

The New Guard: Broadcom, Oracle, and Palantir

Broadcom is a cornerstone of the AI infrastructure arms race. The company supplies critical components like chips, memory, and interconnect technologies that power large-scale AI compute. Fidelity highlights Broadcom as a prime beneficiary of the expanding demand for computing power, with its stock outperforming traditional Mag 7 members like Tesla and Amazon.

Oracle has made a bold pivot into AI, raising $18 billion in debt to fund its infrastructure expansion. While the stock initially dropped 25% due to investor jitters, , pushing its market cap toward $1 trillion. This volatility underscores the sector's speculative nature but also highlights Oracle's strategic positioning in cloud computing and AI partnerships with OpenAI.

Palantir is the standout performer, . The company's AI-driven data analytics platforms have seen explosive demand, particularly in government contracts and U.S. commercial markets. , and it . Despite valuation concerns, its ability to monetize AI tools in high-margin sectors makes it a compelling play.

The Original Mag 7: Diverging Fortunes

While the original Magnificent 7 still dominate the S&P 500 (accounting for 35% of its value), their collective influence is fraying. Nvidia, Microsoft, Alphabet, and Meta have thrived in the AI era, . However, Apple, Amazon, and Tesla are lagging due to uncertain growth trajectories and intensifying competition according to .

This divergence signals a critical shift: the AI narrative is no longer monopolized by the original seven. Companies like Broadcom, Oracle, and Palantir are now central to the ecosystem, offering more direct exposure to the infrastructure and applications fueling the AI boom.

### Strategic Reallocation: Why the New Magnificent 7 Matter
The Bloomberg Multi-Thematic Index's 50% gain versus the Mag 7's more modest performance is a wake-up call. Investors should consider reallocating toward the next generation of AI leaders, particularly those with strong earnings momentum and diversified exposure. Oracle's cloud infrastructure, Broadcom's semiconductor dominance, and Palantir's data analytics platforms are not just complementary to the AI story-they are its engines according to .

Cboe's new MGTN Index, launching futures and options in late 2025, provides a vehicle for targeted exposure to this cohort. Meanwhile, Fidelity's focus on AI infrastructure and energy providers underscores the broader economic impact of the revolution according to Fidelity analysts.

The Verdict: Ride the Wave, But Stay Cautious

The AI trade is shifting, and the new Magnificent 7 are leading the charge. While volatility remains a concern-evidenced by the VIX's rise-this is a classic feature of speculative growth, not a red flag according to . For investors willing to navigate the turbulence, the rewards are clear: Broadcom's infrastructure, Oracle's cloud, and Palantir's analytics are reshaping the landscape.

The time to act is now. The original Mag 7 may have started the AI revolution, but the next chapter belongs to the companies building its foundation.