The Return of the "Magnificent Seven:" The Investment Committee's Strategy 9/4/26

**SPEAKER_1** (0:00)
At Edward Jones, we believe rich isn't about having life all figured out. It's opening yourself to all the possibilities. That's why your dedicated financial advisor provides long-term planning built around you, meeting you where you are, and helping you get closer to where you want to be. So no matter where you're starting from, you can move forward with confidence. The key to being rich is knowing what counts.
Let's find your rich. Edward Jones, member SIPC.

**SPEAKER_2** (0:30)
With the Discover Cashback Card, it's payback time when you earn cash back on everyday purchases. Activate and earn 5% cash back at different categories each quarter on up to $1,500 in purchases. That's 5% cash back at different places each quarter, like grocery stores, on gas, and at restaurants. It pays to discover. Terms apply. See discover.com/five for details.

**Scott Wapner** (0:57)
I'm Scott Wapner, and you're listening to CNBC's Halftime Report, the podcast, the most profitable hour of the trading day. We record this live weekdays at 12 Eastern. Listen in.
All right, guys, thanks so much. Welcome to the Halftime Report. I'm Scott Wapner. Front and center this hour, the return of the MAG-7. Big Tech taking back its leadership role lately. We will discuss, we will debate, and we will talk about everything moving today with the Investment Committee. Joining me for the hour, Jim Labenthal, Kevin Simpson, Rob Seachen, Steve Weiss. Take you to the markets. We do have a mixed picture, if you include the Russell being green, but everything else is red. You did have a better than expected jobs report. The problem with that is the bond market reacting too. So the short end is up, yields are long end down. So we'll keep watching that. There's the 10 year treasury, but we're watching that as we have been really every single day. I did mention our top story, and that's where we really want to begin today. It is big techs, big move. I thought this point that Mike Santoli made earlier this morning was a great one for us to jump off on. This is a six month look, Mag 7 versus the S&P 500 And you can see the very end to the right that the Mag 7 has started to outperform again. Look at between June and July, from July to August, we did have underperformance from the Mag 7 versus the S&P 500
Market felt a little dicey at times during that stretch, but as Mike also said, maybe it was earnings from these big technology companies that restarted this outperformance trend. I thought we'd jump off there, because I think it's meaningful to the market.

**Jim Labenthal** (2:41)
I think it is too. And, you know, where I look in the Mag 7, Scott, is particularly at NVIDIA. I really think, to me, that's where the turnaround in the Mag 7 came. Now, we talked last week about how good NVIDIA's earnings were. We liked the stock response, but that it hadn't flowed through. At least last week, it didn't flow through immediately to the rest of tech space. I think that was just a delayed reaction. And I'm also happy to say that it's not just chips. In fact, it's things like Microsoft. It's things like Meta.
So, to me, it was really NVIDIA, the clearing event, that was the term that we used, that tells us that the AI CapEx is going to continue, that it's profitable, which, by the way, to Mike's points about earnings, that's what we heard in the earnings season, is that all of this CapEx is profitable. Andrew Jassy, CEO of Amazon, saying things like it takes less than three years to recoup the cost of a new data center.
Excuse me, Alphabet growing its web services at 80%, Microsoft Azure at 40%. There are fundamental earnings-based reasons why the MAG-7 is performing, and on top of that, the valuations are not too hard to justify.

**Scott Wapner** (3:47)
NVIDIA is up 7%. Well, now it's 6%. It's peeled back a little bit off of where it was when we started. It was up as much as 7.5% this week. They did the hugging face deal.
Their investments are growing. I'm wondering how you see, I just think that what Mike took a look at, as sort of he usually does, he has really just great insight into what's really happening underneath the surface. If this is going to be the case, if the MAG-7 has now reasserted itself, what does that mean for where we go from here in a month that has historically been unkind?

**Kevin Simpson** (4:22)
So I'm less concerned about the timeliness of the market, this being September. One month has to be the worst month, Scott. It just happens to fall in September. So I tend not to trade around the tarot cards or the farmer's almanac, but what I liked about the opening from both of you is you didn't talk about the MAG-7 as an acronym. You both talked about NVIDIA. So what we're doing is we're isolating the winners within the MAG-7, but the reason that they're performing well collectively is exactly what you said. It has to do with earnings, and to me, more importantly, it had to do with the guidance. So we're looking at companies that are improving returns. Yes, they're spending a lot, but we're starting to see a return on that investment. And most importantly to me, we're seeing the valuations from the fundamentals, from the P-E ratios, we're seeing them stay within range. So the stocks are moving higher, but in essence, they're getting a little bit cheaper.