Name: Mag 7 gap widens as AI shifts from hype to margins
Uploaded: 2025-12-29T23:02:35.591Z
Duration: 2 min 48 s
Description: CNBC’s MacKenzie Sigalos reports on a growing Mag 7 split driven by who’s turning AI capex into margins — with Alphabet and Nvidia leading, Amazon and Meta trailing, Apple a distribution wildcard, and the strongest AI trade showing up in memory and storage names.

CNBC’s MacKenzie Sigalos reports on a growing Mag 7 split driven by who’s turning AI capex into margins — with Alphabet and Nvidia leading, Amazon and Meta trailing, Apple a distribution wildcard, and the strongest AI trade showing up in memory and storage names.

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The Mag 7 group of major tech stocks is no longer trading as a unified group, with Alphabet and NVIDIA leading due to strong margins and strategic positioning in AI, while Amazon and Meta lag behind. The divergence is attributed to differences in how companies are converting AI investments into profitability, with Alphabet benefiting from its full-stack ownership and NVIDIA from high chip demand.

Looking ahead, the focus in the AI sector is expected to shift from top-line revenue growth to efficiency and return on investment. Companies like Micron, Western Digital, and Seagate have outperformed the Mag 7 in 2023, and success may increasingly depend on distribution and marketplace accessibility rather than solely on developing the best AI models.

Mag 7 gap widens as AI shifts from hype to margins

Jay was just mentioned we're seeing a divergence in Mag 7 stock trading. Could it carry over into next year? Mackenzie Segalos is here. Mack, what do you see? Hey, John. So the Mag 7 is no longer trading as a monolith. Alphabet and NVIDIA are leading the pack. Amazon is in last place, and 2026 could widen that gap. The divide comes down to margins. Alphabet owns the full stack, chips, cloud, distribution, and Gemini, with cloud margins expanding thanks to its custom silicon. NVIDIA is winning because everyone else's CapEx flows through its chips, with gross margins north of 70%. Now, the laggards tell a different story. Amazon is up just 6%, with AWS growth trailing Azure and Google Cloud, and CapEx exceeding operating income. Meta has poured tens of billions into AI talent, reorg-ed the unit at least four times this year, and still no clear payoffs. Shares underperformed the S&P this year. Now, the setup for 2026. If models keep converging, distribution matters more than who trained the best model. Apple may be near the bottom this year, but if the model race commoditizes, and we're seeing signs of that happening right now, its 2.3 billion plus devices could become the competitive moat. And if you want to know where the AI trade is really working, look past the Mag 7. Micron has tripled. Western Digital up almost 300% this year. Seagate over 230%, so those memory and storage names are beating the headline names. John? Mackenzie, so I wonder, really, I guess it comes down to in 2026, does the story continue to be driven by AI excitement and the revenue at the top line, or does it move into efficiency and results at the bottom line? Because if it does, and if Amazon, say, with Bedrock, with its models, is able to show some efficiency, does it matter less if its revenue number, raw revenue growth number, isn't the same as some of the others? Absolutely the latter. So you already saw that halo effect of open AI deals wear off in the context of Oracle now trading below where it was before it announced that open AI run up. And so looking ahead into next year, it is completely about how do you turn those CapEx spend into immediate ROI? And with Meta, I mean, you saw them, you saw shares there have their worst single day sell-off in three years after they announced that CapEx boost without showing a commensurate boost to their ROI on AI outside of their ad strategy. And so in the context of Amazon, you mentioned Bedrock, and that's how they sell different large language models. So they also offer theirs, which is Nova, but really the people are, their customers are accessing open AI's models and Anthropx models through Bedrock. And so it's less about who has the most competitive model. And it's more about who has the marketplace where it's easier to buy them. And that's, that works best with AWS customers.

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Mag 7 gap widens as AI shifts from hype to margins

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