Chart is for illustrative purposes only. Past performance is not necessarily an indication of future results.
In the third quarter, the Magnificent 7 stocks contributed 4.1% to the S&P 500’s year-over-year earnings growth compared to more than double that, or 9.4%, from the rest of the index. Beyond the third quarter, the Magnificent 7 stocks are expected to trail the earnings growth contribution from the rest of the market for all of 2025. Earnings are broadening beyond tech, and they are on track to continue this path in 2026 — a positive sign in our view.
What’s behind this shift? Productivity and profitability among all sectors have been improving on the heels of AI technology advancements, lower borrowing costs and business-friendly regulatory and policy provisions set by this year’s tax and spending bill. These factors should support upward earnings momentum in 2026 across the S&P 500.
In fact, consensus expectations are for the index’s earnings to grow 14% next year with 5.4% of that growth coming from the Magnificent 7 and 8.9% from the rest of the market. This is in line with our 10-15% earnings target for 2026 as well as our view that the broadening trend will strengthen further in the upcoming months.
All investments involve risk, including the possible loss of principal. Certain investments have specific or unique risks that should be considered along with the objectives, fees, and expenses before investing.
The S&P 500 Index: The S&P 500 Index is a stock‐market index that tracks the performance of 500 of the largest publicly traded U.S. companies, weighted by their market capitalization, and is widely used as a benchmark for the overall U.S. equity market. Investors may not invest directly into any index.
The Magnificent 7: The Magnificent 7 comprises seven of the largest technology-centered growth stocks: Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla.
This material has been provided for informational purposes only and should not be construed as investment advice or a recommendation of any particular investment product, strategy, investment manager or account arrangement, and should not serve as a primary basis for investment decisions. Prospective investors should consult a legal, tax or financial professional in order to determine whether any investment product, strategy or service is appropriate for their particular circumstances.
Views expressed are those of the author stated and do not reflect views of other managers or the firm overall. Views are current as of the date of this publication and subject to change. This information contains projections or other forward-looking statements regarding future events, targets or expectations, and is only current as of the date indicated. There is no assurance that such events or expectations will be achieved, and actual results may be significantly different from that shown here. The information is based on current market conditions, which will fluctuate and may be superseded by subsequent market events or for other reasons. References to specific securities, asset classes and financial markets are for illustrative purposes only and are not intended to be and should not be interpreted as recommendations. Information contained herein has been obtained from sources believed to be reliable but not guaranteed. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission.
BNY Investments is the brand name for the investment management business of BNY and its investment firm affiliates worldwide. BNY is the corporate brand of The Bank of New York Mellon Corporation and may also be used to reference the corporation as a whole or its various subsidiaries generally.
NOT FDIC INSURED | NO BANK GUARANTEE | MAY LOSE VALUE
MARK-854566-2025-12-16