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Today's Featured Article How the Mag 7's 2025 Laggards Could Turn Into 2026 WinnersWritten by Jordan Chussler. First Published: 12/31/2025. 
Key Points - While the broad tech sector once again outperformed the S&P 500 in 2025, a handful of the Magnificent Seven stocks failed to live up to their hype.
- NVIDIA, Apple, Meta Platforms, and Microsoft all trailed the benchmark index’s 17% gain last year.
- While those firms’ enormous AI CapEx is likely to increase, there are plenty of reasons to believe those four stocks will once again outperform in the year ahead.
Tech stocks had another strong showing in 2025, finishing second among the S&P 500's 11 sectors for the second consecutive year. But for investors who piled into the mega-cap Magnificent Seven, the results were mixed. Apple (NASDAQ: AAPL), for example, finished the year with a gain of less than 12%, trailing the S&P 500's 2025 increase of 17.49%. Speculation around the future of private space companies is accelerating as new technologies move closer to commercialization.
In a recent sponsor briefing, one analyst explores how satellite networks could reshape global connectivity and examines ways some investors are seeking indirect exposure to the space economy through publicly traded assets — without waiting for a formal IPO. The presentation outlines the concept, potential implications, and important considerations. Read the full sponsor briefing here Shareholders of Microsoft (NASDAQ: MSFT), Meta Platforms (NASDAQ: META), and Amazon (NASDAQ: AMZN) saw more modest gains of just over 16%, about 10%, and under 5%, respectively. Those aren't the returns investors expect when paying premiums for a handful of companies that dominate index weightings. Looking toward 2026, however, there are several reasons to believe these four laggards could again outperform the S&P 500. AI CapEx Hindered the Magnificent Seven's Growth Last Year The underperformance among the Magnificent Seven wasn't uniform. Three members—Tesla (NASDAQ: TSLA), NVIDIA (NASDAQ: NVDA), and Alphabet (NASDAQ: GOOGL)—outpaced the S&P 500, producing index-beating returns of nearly 21%, 36%, and 66%, respectively. For the other four, performances diverged markedly. Contributing factors included record-high valuations, concerns about market concentration, and chatter about an AI bubble. More directly, elevated capital expenditures (CapEx) tied to AI initiatives were a primary drag. Amazon's underperformance, for example, is at least partly attributable to heavy AI infrastructure spending. Big Tech collectively spent roughly $400 billion on chips, data centers, and storage in 2025; Amazon accounted for about $125 billion of that, including $11 billion for a 1,200-acre data center in Indiana and $10 billion for a 20-building AWS project in North Carolina's Research Triangle. Those investments weighed on the company's free cash flow, which fell from $3.6 billion in Q4 2024 to -$12.4 billion and -$8.4 billion in the first two quarters of 2025. Apple has faced criticism for lagging on AI spending, but it plans to ramp up AI CapEx in the year ahead to catch up with Microsoft and Meta, both of which committed massive sums to Azure, Copilot, and Meta AI—investments that also pressured their near-term results. Amazon's Business Diversification and Robotics Since its all-time high on Nov. 3, 2025, AMZN is down nearly 9%. The company is, however, pursuing several strategies to offset heavy AI CapEx. Amazon is positioning itself as a potential grocery disruptor and is expanding its robotics program, a push that could automate the equivalent of up to 600,000 roles and materially reduce payroll costs. At the same time, AWS remains the world's largest cloud provider with roughly 31% of global market share. From Q3 2021 to Q3 2025, AWS revenue grew from $16.11 billion to $33.01 billion—a nearly 105% increase. The company hasn't missed earnings expectations since Q4 2022, giving it 11 consecutive quarterly beats. Analysts are generally bullish on AMZN for 2026: 58 of 61 analysts covering the stock give it a Buy rating, and the average 12-month price target implies about 27.4% upside. Apple's Stock Buybacks Signal Positive Expectations Apple has not matched its peers in AI CapEx, but it plans to increase spending to stay competitive. Meanwhile, the company repurchased $185.65 billion of stock in 2025, which can boost shareholder value by reducing the float and increasing earnings per share (EPS). Institutional investors were net buyers of AAPL over the past year, contributing roughly $316 billion in inflows versus $174 billion in outflows. Apple has beat earnings expectations every quarter since Q1 2023, and quarterly net income rose more than 86% between Q4 2024 and Q4 2025, from $14.7 billion to $27.4 billion. Another headwind in 2025 was tariff uncertainty, which weighed on Apple's China and India businesses. With greater clarity on trade policy, the potential impact of those policies on AAPL should diminish going forward. Meta Has Wall Street on Its Side Meta's AI spending drove a sharp drop in net income, which fell about 87% from $20.8 billion in Q4 2024 to $2.7 billion in Q3 2025. Still, Wall Street remains largely supportive. Of 50 analysts covering META, 43 rate it a Buy. The average 12-month price target suggests more than 23% upside, and institutional ownership is high at nearly 80%. Analysts expect Meta's AI investments to pay off through improved ad efficiency from tools like Advantage+, expanded monetization of WhatsApp and Threads, and the rollout of new AI models (e.g., Avocado), which should boost sales and impressions despite short-term margin pressures. Microsoft Is Seeing More Copilot Adoption Microsoft's Azure is second only to AWS in cloud services, commanding roughly 20%–22% of the global market and continuing to drive top-line growth. Azure helped produce a notable revenue increase—about 40%—in Q1 2026. Looking ahead, a primary tailwind for Microsoft in 2026 is broader adoption of Copilot. The AI assistant, integrated across Windows and the Microsoft 365 suite, is now used by more than 90% of Fortune 500 companies. Analysts estimate AI cloud adoption could add up to $25 billion to Microsoft's revenue by the end of FY2026. Among analysts covering MSFT, 39 of 43 assign it a Buy rating, and the average 12-month price target implies more than 29% potential upside.
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