By Isabel Wang and Christine Ji
The stock market is still unable to make new records without the 'Magnificent Seven' cohort
Markets haven't had many weeks in 2026 like this one.
The Nasdaq Composite and the S&amp;P 500 bled steadily throughout the week, with memory-chip stocks and the &#34;Magnificent Seven&#34; getting hit as investors grew increasingly skeptical about the massive bets technology companies are making on artificial intelligence.
The Nasdaq COMP slumped 4.6% this week, logging its worst week since June 5, while the S&amp;P 500 SPX fell 2%. The weekly losses compounded what's already been a brutal month for the tech-heavy indexes, putting the Nasdaq on pace for its biggest monthly decline since March 2025, down roughly 6.2% so far in June, according to Dow Jones Market Data.
The so-called Magnificent Seven group of tech names, the megacap stocks that drove markets to record highs in recent years, collectively lost nearly $2.8 trillion in market capitalization this month, a monthly record it if holds, according to FactSet data.
The selloff has been broad-based in the tech industry, sweeping up memory-chip makers, semiconductors and hyperscalers alike. Memory-chip stocks, such as Micron Technology (MU) and Sandisk (SNDK), usually driven by their own boom-and-bust cycle, fell in lockstep with the hyperscalers that had long anchored the broader stock market. The companies investors once turned to for shelter were swept up in the selloff, too.
&#34;The crux of it, from my view, is the demand for memory chips has grown practically overnight, and that is fueling huge growth for memory stocks, but it's also a supply issue driving prices higher,&#34; said Brian Mulberry, chief market strategist at Zacks Investment Management. &#34;It boils down to another cost increase to the Mag 7, and there are already concerns around future profits there,&#34; he added.
Under the surface, the tech leadership powering the AI boom is undergoing a shift. While the Magnificent Seven were dominant earlier on in the cycle, investors are &#34;going further up the supply chain in the semiconductor space,&#34; David Keller, president and chief strategist at Sierra Alpha Research, told MarketWatch on Friday.
A critical bottleneck in memory chips has handed Micron and other names unprecedented pricing power. Hyperscalers have raised their capital-expenditure forecasts in the face of rising memory costs, and earlier this week Apple (AAPL) announced product-price increases because of rising component costs.
Investors are right to be cautious. AI stocks have enjoyed years' worth of multiple expansion driven largely by expectations rather than realized profits. Markets have rewarded companies for promising an AI-driven future, often overlooking earnings that have yet to catch up with the scale of investment. With the recent rotation into memory and other semiconductor names, market leadership is increasingly predicated on current supply-and-demand dynamics persisting.
Micron's current momentum is basically a bet on memory bottlenecks &#34;persisting in perpetuity,&#34; which Keller doesn't believe is a likely scenario.
One corner of tech has been continuously excluded from the AI hype, and this month was no exception. Software providers have been hit hard as investors wonder whether their business models will be replaced by AI, and stocks like Salesforce (CRM), ServiceNow (NOW) and Palantir (PLTR) deepened their downward slides in recent weeks.
Back in May, software stocks experienced a slight bounce as semiconductor names cooled - a signal that investors viewed the two groups as a pair trade. But now the entire sector is experiencing a seemingly indiscriminate selloff.
Even Micron's exceptionally robust earnings weren't enough to lift the broader market, said Charlie McElligott, managing director of cross-asset strategy at Nomura Securities. &#34;The U.S. stock market is currently chopping itself into pieces and unable to make new all-time highs without the participation of the [Magnificent Seven] cohort, and in this case more specifically, the hyperscalers are collectively down 16.4% since the end of May.&#34;
-Isabel Wang -Christine Ji
This content was created by MarketWatch, which is operated by Dow Jones &amp; Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
06-26-26 1716ET

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Tech stocks suffered one of their worst weeks in a year as the Nasdaq slumped 4.6% and the S&P 500 fell 2%, driven by investor skepticism over AI investment costs. The 'Magnificent Seven' lost nearly $2.8 trillion this month. While memory chip makers like Micron saw gains from supply bottlenecks, broader tech leadership shifted, with software providers also declining. Markets remain unable to reach new highs without major tech participation.

- The stock market is struggling to reach new highs without the support of the 'Magnificent Seven' tech stocks, which have collectively lost nearly $2.8 trillion in market capitalization this month.  
- The Nasdaq Composite fell 4.6% this week, reflecting broader declines across the tech sector, driven by concerns over artificial intelligence investments and rising memory chip prices.  
- As hyperscalers and memory-chip manufacturers face financial pressures, market leadership is shifting, raising investor skepticism about the sustainability of current tech stock valuations.

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Tech stocks just had one of their worst weeks in a year. Here's how AI momentum went off the rails.