Goldman Sachs stated on Thursday that Wall Street's appetite for Magnificent Seven stocks has declined heading into the second half of the year, as investors reduce exposure to the blue-chip group in favor of semiconductor companies. The bank believes markets are rewarding companies that generate returns from artificial intelligence investments while questioning those bearing the costs of AI infrastructure buildout. In the first half of 2026, this shift manifested in stark performance divergence: the Roundhill Magnificent Seven ETF marginally declined while semiconductor-focused ETFs surged, with the VanEck Semiconductor ETF gaining 72 percent and the iShares Semiconductor ETF increasing 99 percent.
Goldman Sachs Identifies Spending Divide in AI Investment Thesis
Brian Garrett, derivatives specialist at Goldman Sachs, centered his analysis on corporate spending patterns in the AI sector. In a note seen by Investing.com, Garrett stated that the market is rewarding companies that earn from AI investments, specifically capital expenditure beneficiaries and semiconductor manufacturers, while questioning companies that spend on AI infrastructure. Garrett described this dynamic as having been "hiding in plain sight for months."
Hyperscalers Deploy Hundreds of Billions Into Data Center Infrastructure
Hyperscalers including Google, Meta, Microsoft, and Amazon are pouring hundreds of billions of dollars into data center infrastructure to generate compute capacity and maintain their positions in the AI race. Goldman Sachs stated that unless these hyperscalers demonstrate stronger earnings growth, investors are likely to adopt a more cautious approach to mega-cap tech stocks. The AI infrastructure buildout has resulted in a shortage of chips, particularly for memory and storage, forcing companies to raise product prices while seeking long-term supply agreements.
Semiconductor Stocks Outperform Magnificent Seven in First Half of 2026
Semiconductor companies are preparing for demand expected in the second half of the year and have increased production capacity to address chip shortages. Micron started manufacturing 1-alpha DRAMs in the United States this year, while Applied Materials unveiled new chip-making tools to help companies boost output as the industry approaches one trillion dollars in revenue. Performance data for the first half of 2026 shows the Roundhill Magnificent Seven ETF marginally declined while the benchmark S&P index gained just under 10 percent. The VanEck Semiconductor ETF surged 72 percent, the iShares Semiconductor ETF increased 99 percent, and the Roundhill Memory ETF more than doubled in value.
FAQ
What did Goldman Sachs say about Magnificent Seven stocks on Thursday?
Goldman Sachs stated on Thursday that Wall Street's appetite for Magnificent Seven stocks has declined heading into the second half of the year, as investors reduce exposure to the group in favor of semiconductor companies that benefit from AI investments.
How did semiconductor stocks perform compared to Magnificent Seven stocks in the first half of 2026?
In the first half of 2026, the Roundhill Magnificent Seven ETF marginally declined while semiconductor ETFs significantly outperformed: the VanEck Semiconductor ETF gained 72 percent, the iShares Semiconductor ETF increased 99 percent, and the Roundhill Memory ETF more than doubled in value.
Why does Goldman Sachs believe investors are favoring semiconductor companies over hyperscalers?
Goldman Sachs believes markets are rewarding semiconductor companies that earn from AI investments as capital expenditure beneficiaries, while questioning hyperscalers like Google, Meta, Microsoft, and Amazon that are spending hundreds of billions of dollars on data center infrastructure without demonstrating proportional earnings growth.
