Ever since the AI stock bull market began in early 2023, it has been dominated by the Magnificent 7 tech stocks of Apple (AAPL), Nvidia (NVDA), Microsoft (MSFT), Alphabet (GOOGL), Meta (META), Amazon (AMZN), and Tesla (TSLA).
Those seven stocks rose nearly 150% from early 2023 to summer 2024. The rest of the market – of the “S&P 493” as investors have been calling it, which is the S&P 500 less the Mag 7 tech stocks – rose just 20% in that same time frame.
But something has changed.
Those “other guys” are starting to play catch-up.
Since the Fourth of July weekend about two months ago, the S&P 493 has risen 5% while the Mag 7 tech stocks have dropped about 10%.
Is that just a fluke? Or the beginning of a big shift in the markets?
We think it is the beginning of a big shift in the markets.
The ‘Other Guys’ Catch Up to Tech Giants
The reality is that while the Mag 7 tech stocks had a huge head-start in the AI investment cycle because of their ample resources and talent, the “other guys” are starting to catch up as they launch their own AI products and services.
For example, law enforcement technology solutions provider Axon (AXON) just launched a new AI product called Draft One that uses AI to automatically write first draft of police reports using footage data from body cameras. The product is generating enormous early interest, surging to over $100 million in bookings in just three months.
That stock is up more than 60% over the past year.
Coding solutions provider GitLab (GTLB), meanwhile, just reported stunning quarterly results in which revenues rose more than 30% year-over-year thanks to surging demand for its new AI coding assistant tool, GitLab Duo.
That stock is up more than 30% over the past month.
Samsara (IOT) – a company focused on driving digitization throughout physical industries like construction and manufacturing – also just reported stunning quarterly numbers, paced by healthy demand for its AI solutions. Revenues rose nearly 40%.
That stock is up almost 250% over the past two years.
Organizational software provider Smartsheet (SMAR) just reported 50% sequential growth in the number of its users that are utilizing its AI tools. Those 47,000 users utilizing AI have collectively saved about a million hours from AI automations. As a result, revenues are surging higher.
That stock is up 20% over the past two months.
Monday.com (MNDY), Box (BOX), Intapp (INTA), Klaviyo (KVYO), AppLovin (APP), Wix (WIX), and Fortinet (FTNT) are among other smaller tech stocks that have seen their results buoyed by new AI products and services. All of their stocks have been doing very well.
The list goes on and on.
Meanwhile, Nvidia (NVDA) stock is down 20% over the past two months.
The baton is being passed, if you will, in the AI Boom.
The Final Word
The era of Mag 7 dominance in the “Age of AI” is ending.
A new era – where smaller AI stocks take the lead and shine bright – is upon us.
In this new era, we could see a lot more individual stock opportunities than we did in the era when it was just seven stocks going up.
It could be a lot more exciting.
And this new era could potentially get accelerated by a major market event in less than two weeks.
Which is why… to get prepared for this big market broadening… I’m hosting an important strategy session this Wednesday, Sept. 11, and 8 p.m. EST… where I’ll unveil what I believe is one of the best investment strategies to capitalize on this potential major market broadening.
Click here to reserve your seat for that strategy session now.
On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.
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