The Magnificent Seven's Halo Is Fading — the "Other 493" May Outgrow Them This Earnings Season

Title: The Magnificent Seven's Halo Is Fading — the "Other 493" May Outgrow Them This Earnings Season

October 7, 2026

Profit Growth Is Converging: the "Other 493" Are Catching Up

CNBC reports this earnings season could bring a rare sight: the Magnificent Seven's profit growth is no longer in a league of its own. FactSet data projects the seven giants will grow Q3 earnings 31.8% year over year, versus 25.5% for the other 493 companies in the S&P 500. By Q4, the positions could flip entirely — the "other 493" are projected at 25.3%, overtaking the Seven's 22.8%. It would be the narrowest earnings-growth gap between the two groups since 2021.

Nearly $25 Trillion in Market Cap — and a Third of the Index

The Wall Street Journal reported on October 6 that the Seven's combined market cap has risen to just under $25 trillion, a new high, accounting for roughly a third of the S&P 500's total value. Money keeps pouring in: September delivered the largest monthly inflow ever for ETFs tracking the seven stocks. But beneath the boom, undercurrents run — the group spent most of 2026 trailing the broader market, with the MAGS ETF down as much as 16% earlier this year before rebounding since August. JPMorgan notes that heavy AI capital spending is squeezing free cash flow at names like Microsoft; the valuation discount is largely priced in, but the pressure hasn't gone away.

The Money Is Coming From New Faces: Micron, Chevron, and Friends

FactSet's numbers reveal a subtle shift: among the top five contributors to S&P 500 earnings growth in Q2, only Nvidia was a Magnificent Seven member — the rest were Micron, Chevron, Exxon Mobil, and Broadcom. Micron and Nvidia were the top two contributors; excluding just those two, the index's Q2 earnings growth would fall from 24.7% to 16.8%. AI infrastructure suppliers — memory chips, energy — are now sharing the AI feast, while the hyperscalers themselves foot the bill for astronomical capex.

The Rotation Trade Emerges: Equal-Weight Looks Far Cheaper

As the earnings-growth gap narrows, a rotation trade is taking shape. The equal-weighted S&P 500 trades at about 17x forward earnings versus 23x for the cap-weighted version — one of the widest gaps in a decade. Small-cap value has outperformed small-cap growth by 4.1 percentage points since April, its strongest stretch in over a year. Analysts aren't calling for abandoning big tech — just for not concentrating every new dollar at the top of the market-cap ladder. The "boring names" in financials and industrials offer reasonable multiples with improving earnings momentum, historically where durable returns come from.

What to Watch Next: Can AI Spending Turn Into Real Profits?

The season's biggest question remains AI. Goldman Sachs estimates S&P 500 EPS grew 51% year over year in Q2, with AI investment accounting for nearly half of this year's earnings growth. But investors want evidence that astronomical spending on chips, data centers, and infrastructure turns into sustainable revenue and profit. JPMorgan still projects 20% earnings growth for the Seven in 2026 versus 11% for the rest — the gap persists. Whether the "other 493" actually overtake the giants depends on Q4 delivery. One thing is certain: the market is no longer listening to just seven stories.

Sources: CNBC, FactSet, The Wall Street Journal, Reuters, MarketWatch, Barron's, JPMorgan, Investor's Business Daily