Mag 7 stumbles as AI spending concerns return

U.S. stocks are on the back foot Thursday as investors juggle higher oil prices, rising Treasury yields and fresh concerns about the enormous sums being spent on AI.

Those worries resurfaced after the first two Magnificent Seven companies to report earnings this season — Alphabet GOOGL.O and Tesla TSLA.O — raised new questions about AI spending and the durability of growth.

The selling is widespread. All seven stocks in the Roundhill Magnificent Seven ETF MAGS.K are lower, with Alphabet and Tesla leading the decline. The ETF fell to a session low of $62.78 and was last down more than 4% at around $63.44.

For now, buyers appear to be defending the support zone between the June low and the trendline from the April 2025 low, helping to stabilize the ETF after an early selloff.

Technically, MAGS is approaching an important test. Initial support sits around $61.25, near the trendline from the April 2025 low, followed by the June low at $60.72. The 89-week moving average, near $59.15, is another level traders are watching closely after helping contain previous selloffs.

If those support levels give way, the March low near $55 comes into focus. A deeper slide could then target the unfilled weekly gap around $48.40.

The bulls still have a roadmap. A move back above the 34-week moving average could ease near-term pressure, while a break above the mid-July high of $69.09 would improve the technical picture and open the door to a retest of the record high above $71.

More broadly, investors are seeing signs of a shift in market leadership. Growth stocks .IGX are on pace to lag value stocks .IVX for a second straight month. That trend is already evident in the S&P 500 .SPX, where Consumer Discretionary .SPLRCD, Communication Services .SPLRCL and Technology .SPLRCT — sectors heavily influenced by the Magnificent Seven — rank among its weakest performers this month.