Major takeaways from Magnificent Seven’s AI-fueled earnings

By Niket Nishant

May 21 (Reuters) – The latest quarterly earnings from Big Tech companies have given investors ample reason to stay invested in the AI trade, helping lift equities despite the unprecedented disruption in the oil markets that has clouded the economic growth outlook.

Nvidia rounded out the results from the so-called Magnificent Seven that includes Alphabet, Apple, Microsoft, Amazon.com, Meta Platforms and Tesla.

Here are a few graphics laying out the state of play:

NVIDIA GROWTH OUTPACES PEERS

Revenue growth at the Magnificent Seven remains highly uneven, with Nvidia’s blistering pace helping maintain its dominant lead.

The chipmaker’s sales have on demand for AI infrastructure, helping cement its status as the world’s biggest company by market value.

By comparison, others in the group are expanding at a much steadier pace, although they are all expected to funnel billions into their AI ventures, hoping to reap robust profits in the coming years.

DATA CENTER RACE FUELS BORROWING SPREE

To fund their lofty AI ambitions, the Magnificent Seven have been increasingly turning to the bond markets.

Bond issuance from the group has sharply jumped, with debt sales already hitting $134 billion so far this year, compared with 2025’s entire haul of $87.5 billion, according to data from Dealogic.

This year’s surge has been driven by Alphabet, Amazon and Meta — companies at the center of the race to build out AI infrastructure, such as data centers.

AI FAITH POWERS STOCK REBOUND

After an uneven start to the year and volatility in the wake of the Middle East conflict, shares of tech heavyweights have regained momentum.

Investors are betting on the technology’s long-term promise, even as they worry over the pace of returns on the companies’ investments.

However, the hierarchy has at times appeared to shift. Alphabet, which stunned Wall Street with cloud growth that outpaced bigger rivals, came close to overtaking Nvidia to become the most valuable global company, but has since retreated.

TECH CONCENTRATION PAYS OFF

Earnings growth for the Magnificent Seven is expected to stabilize heading into 2027, though the group is still forecast to outperform the broader S&P 500 index, according to data from Tajinder Dhillon, head of earnings research at LSEG.

The trend reinforces the view among bullish investors that the market’s concentration in megacap technology stocks is backed by fundamentals rather than exuberance.

“There’s no reason for investors to do anything differently because the current, concentrated makeup of the indexes has worked in their favor,” said Isabelle Freidheim, founder and managing partner at Athena Capital.

CAPEX BOOM COULD SQUEEZE BUYBACKS

Capital spending across S&P 500 companies is expected to accelerate sharply over the next few years, raising questions about how much cash will remain available for shareholder returns.

Capex at the S&P 500 companies is forecast to grow 33% in 2026, compared with just a 3% rise in buybacks, data from Goldman showed.

(Reporting by Niket Nishant and Purvi Agarwal in Bengaluru; Editing by Sriraj Kalluvila)