Ed Yardeni, president of Yardeni Research, believes the era of unchecked dominance for the ‘Magnificent 7’ tech stocks is waning, arguing that the artificial intelligence (AI) boom is poised to benefit the broader range of companies he calls the “Impressive 493.”
The End Of Tech Kingdoms
Speaking to CNBC, Yardeni compared the previous tech landscape to a “Game of Thrones” scenario, describing the tech giants as “seven independent kingdoms” that prospered behind unique business moats.
However, the rapid rise of generative AI has broken down those barriers, forcing these deeply entrenched companies into direct competition with one another. This intensified rivalry, Yardeni argues, “is going to start to narrow some of their profit margins.”
Here’s how Magnificent 7 stocks have performed in 2025.
| Stocks | YTD Performance | One Year Performance |
| Nvidia Corp. (NASDAQ:NVDA) | 36.80% | 34.94% |
| Apple Inc. (NASDAQ:AAPL) | 11.69% | 5.48% |
| Microsoft Corp. (NASDAQ:MSFT) | 16.31% | 10.82% |
| Amazon.com Inc. (NASDAQ:AMZN) | 5.41% | 1.35% |
| Alphabet Inc. Class A (NASDAQ:GOOGL) | 65.95% | 60.29% |
| Alphabet Inc. Class C (NASDAQ:GOOG) | 65.60% | 59.78% |
| Meta Platforms Inc. (NASDAQ:META) | 10.96% | 9.41% |
| Tesla Inc. (NASDAQ:TSLA) | 28.02% | 5.04% |
| Roundhill Magnificent Seven ETF (BATS:MAGS) | 25.79% | 17.30% |
See Also: S&P 500 Could Smash 7,000 Soon—If Traders’ Moonshot Bets Are Right
The Real AI Beneficiaries
The next phase of the market rally, according to Yardeni, will be defined by AI adoption rather than just creation.
He pointed out that Information Technology and Communication Services already comprise nearly 45% of the S&P 500 market capitalization, making it difficult for investors to justify getting more overweight on the sector.
Instead, Yardeni believes the “real beneficiaries of AI” moving forward will be “everybody else” in the index that effectively utilizes new technologies to improve their existing businesses—the remaining 493 companies.
‘Real Economy’ Plays And Market Outlook
To capitalize on this rotation, Yardeni advises looking toward “real economy stuff.”
He continues to recommend overweighting Financials, which perform well when the underlying economy is solid, and Industrials, which are currently benefiting from massive capital spending on building new manufacturing facilities.
Despite the predicted rotation away from big tech leadership, Yardeni remains incredibly bullish on the overall market.
He forecasts the S&P 500 hitting 7,700 next year—marking a potential fourth straight year of double-digit gains—and projects the index could reach 10,000 by the end of the decade.
S&P 500, Nasdaq, Dow Jones Gain Year-To-Date
After a series of federal and economic headwinds, the stock market remained resilient in 2025, with all three major U.S. benchmark indices advancing over the course of the year.
The S&P 500 was 17.74% higher, whereas the Nasdaq Composite and Dow Jones gained 22.20% and 14.27%, respectively, on a year-to-date basis.
The SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust ETF (NASDAQ:QQQ), which track the S&P 500 index and Nasdaq 100 index, respectively, closed higher on Tuesday. The SPY was up 0.46% at $687.96, while the QQQ advanced 0.47% to $622.11, according to Benzinga Pro data.
The futures of Dow Jones, S&P 500, and Nasdaq 100 indices were lower on Wednesday.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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