The structural trend that dominated Wall Street for the better part of three years is showing signs of a significant regime shift.



The Roundhill Magnificent Seven ETF (NASDAQ:MAGS), which provides concentrated exposure to the tech giants driving the artificial intelligence revolution, has seen its momentum stall in early 2026. In comparison, the broader market begins to outperform.



493 of the 500 stocks in the S&amp;P 500 are outperforming the Magnificent Seven so far in 2026. Two exchange-traded funds are capturing this divergence in real time.



<h2>Scorecard So Far</h2>



As of Thursday, the Roundhill Magnificent Seven ETF (NYSE:MAGS) is down 5.60% year-to-date, while Defiance Large Cap ex-Mag 7 ETF (NASDAQ:XMAG) — the ETF offering S&amp;P 500 exposure with the Magnificent Seven removed — is up 3.23% over the same period. That’s a nearly 9-percentage-point gap.



MAGS, which holds equal-weight positions in NVIDIA Corp. (NASDAQ:NVDA), Meta Platforms Inc. (NASDAQ:META), Apple Inc. (NASDAQ:AAPL), Alphabet Inc. (NASDAQ:GOOG) (NASDAQ:GOOGL), Tesla Inc. (NASDAQ:TSLA), Amazon.com Inc. (NASDAQ:AMZN) and Microsoft Corp. (NASDAQ:MSFT), carries $3.50 billion in assets under management.



<h2>What Is XMAG And Why Does it Exist?</h2>



XMAG, listed on NASDAQ and launched on Oct. 21, 2024, tracks the BITA US 500 ex Magnificent 7 Index .It is a benchmark that includes the 500 largest U.S. publicly traded securities while explicitly excluding the seven mega-cap tech names.



The index uses free-float market capitalization weighting and rebalances quarterly. As of Thursday, the fund holds 493 stocks and carries net assets of $137.79 million.



<h2>‘Great Valuation Rotation’ Thesis</h2>



The divergence between XMAG and MAGS tracks closely with what veteran investor Ed Yardeni of Yardeni Research is calling the “Great Valuation Rotation of the Roaring 2020s.”



In a note to clients this week, Yardeni said the global rebalancing trade that began late last year is likely to extend well into 2026.



Photo Courtesy: JOURNEY STUDIO7 on Shutterstock.com

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The Roundhill Magnificent Seven ETF (MAGS) has seen a decline of 5.60% year-to-date in 2026, while the Defiance Large Cap ex-Mag 7 ETF (XMAG) has gained 3.23%, highlighting a significant shift in market dynamics. Currently, 493 of the 500 S&P 500 stocks are outperforming MAGS, indicating a broader market strength. This trend aligns with Ed Yardeni's "Great Valuation Rotation" thesis, suggesting a global rebalancing that may continue into 2026.

- A shift in market dynamics is occurring as the Roundhill Magnificent Seven ETF has stalled, with 493 of the 500 S&P 500 stocks outperforming it in early 2026.  
- Year-to-date, MAGS is down 5.60%, while the Defiance Large Cap ex-Mag 7 ETF, which excludes the Magnificent Seven, is up 3.23%, showing a significant performance gap.  
- This divergence is linked to Ed Yardeni's "Great Valuation Rotation of the Roaring 2020s," suggesting ongoing global rebalancing throughout 2026.

Magnificent 7 Lose Their Grip As 493 S&P 500 Stocks Lead In 2026