Make MAG 7 Great Again? Big Tech Is Back in S&P 500 Driver's Seat

The same technology giants that helped drag the S&P 500 to the brink of a bear market after Liberation Day on April 2 are giving the recovery in US equities some legs.

$NVIDIA Corp(NVDA)$   put a bow on a better-than-expected earnings season for Big Tech last week by delivering a strong outlook for revenue, despite US restrictions on sales of its chips in China. Nvidia has reclaimed the title of the world's most valuable company.

The S&P 500 Index is within 3% of its February record high, with much of the rebound being fueled by easing tensions between the US and its trade partners, as well as Big Tech results that show AI frenzy is far from over.

Over the past eight weeks, eight Big Tech is back in S&P 500 driver's seat. $Broadcom (AVGO.US)$ has soared over 75% since the benchmark bottomed out on April 7, with its stock price hitting an all-time high. $NVIDIA (NVDA.US)$ is up 50% since April 7, while $Tesla (TSLA.US)$ and $Meta Platforms (META.US)$ have gained 43% and 32%, respectively.

That's a sharp reversal, given most of the Big Tech had been underperforming the S&P 500 on the year. Considering the group accounts for a third of the index, their recent surge now accounts for nearly half of the S&P 500's 18% rally from the April bottom, according to data compiled by Bloomberg.

Will Big Tech Continue to Drive the Market Higher?

Truist Advisory Services' Keith Lerner, sees Big Tech leading the broader market higher in the last half of 2025 with spending on artificial intelligence computing continuing to climb.

$Meta Platforms (META.US)$ raised its forecast for capital expenditures this year and $Microsoft (MSFT.US)$ said it plans to increase spending in its next fiscal year, alleviating concerns that the companies might pull back on such outlays after two years of largesse.

Additionally, Meta has signed a 20-year agreement to buy nuclear power from $Constellation Energy (CEG.US)$, continuing the wave of tech giants teaming up with the industry in order to meet the growing power needs of data centers.

"Investors are going to be drawn back toward these names with secular growth," said Lerner. Tech "could be that catalyst later on to actually see the market re-accelerate later in the year."

However, tariffs and other Trump policies remain a big market overhang. Besides, Big Tech’s hefty valuations pose another hurdle. The Magnificent Seven is priced at 30 times projected profits, according to data compiled by Bloomberg. Meanwhile, the S&P 500 is trading at 21 times earnings projected over the next 12 months, up from a low of 18 times in April and well above the average of 18.6 times over the past decade.

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