If their AI bets go wrong, the whole market could go with them
The Magnificent Seven now account for nearly a third of the S&P 500.
An S&P 500 index fund generates returns (less exceptionally low fees) that mirror the stock market as a whole, removing the need for people to become stock-pickers.
As of the end of last year, index funds and exchange traded index funds held a combined $30 trillion.
Stock picking has become extinct, almost.
Index funds have stopped being a proxy for the entire market. Why? Because seven companies are now so dominant that the market rises and falls largely based on their performance. —“the Magnificent Seven,” Wall Street called them.
At the close of 2025, these stocks had returned a remarkable 875 percent in 10 years.
Indeed, over the last three years, they accounted for 55 percent of the market’s total returns, with the other 493 companies in the index making up the other 45 percent.
But as you’ve no doubt noticed, things have gone into reverse so far this year. The Magnificent Seven, with the addition of Oracle, have become what critics call “the Hateful Eight.” They account for about 85 percent of the index’s fall in the first quarter of 2026.
The false perception of riskless returns from index funds may soon be punctured by reality.
Bethany McLean The Free Press 04.13.26
https://www.thefp.com/p/the-ai-boom-was-great-for-your-401k-bust-wont-be
“The silent road to serfdom: why passive investing is worse than Marxism”
The Economist januari 14, 2026
https://englundmacro.blogspot.com/2026/01/the-silent-road-to-serfdom-why-passive.html
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