How is Mag 7 faring in latest AI-run ?
The Great Rotation.
The rotation out of AI and AI-related stocks started in early July 2026, after a strong run in the sector turned into profit-taking and valuation concerns.
It was driven by worries that AI spending may take longer to pay off, while investors rotated into cheaper and more cyclical names.
It may ease, when earnings and real returns from AI spending become clearer.
Since early June 2026, Wall Street's major stock indexes have all rallied to fresh record highs.
While artificial intelligence (AI) is the trend behind this surge in stock valuations, it's the "Magnificent 7" that have done most of the heavy lifting.
The Magnificent Seven are - $Apple(AAPL)$, $Amazon.com(AMZN)$, $Alphabet(GOOG)$, $Meta Platforms, Inc.(META)$, $Microsoft(MSFT)$ , $Nvidia (NVDA) and $Tesla(TSLA).
They are some of Wall Street's most influential businesses and their future success relies heavily on the growth of AI.
At the same time, they are also companies with markedly different outlooks, based on their operating cash flow.
Forward-year cash flow.
The price-to-earnings (P/E) ratio is widely accepted as a quick gauge of a company's financial health.
This is because it instantly shows how much investors are willing to pay for every dollar of profit the business earns and acts as a safety blanket for investors when evaluating mature businesses quickly.
However, it does not do justice to growth stocks, ie. the Mag 7, given that they aggressively reinvest their cash flow into high-growth initiatives.
As a result, future cash flow serves as a superior measure of their values.
According to Wall Street's consensus cash-flow-per-share estimates for next year, here's how the Magnificent Seven rank from most (i.e., cheapest) to least attractive (as of July 23)
Based on Wall Street's average forecasts for next year's cash flow per share, here is how the "Mag 7" tech companies rank from the best deal to the most expensive as of 23 Jul 2026:
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META: 9.44x estimated forward-year cash flow
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AMZN: 10.36x
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MSFT: 13.04x
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GOOG: 14.87x
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NVDA: 15.79x
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AAPL: 28.82x
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TSLA: 64.71x
Based on future cash flow:
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Worst. Neither EV maker TSLA nor iPhone titan AAPL are particularly attractive.
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Best. On the other hand, META & AMZN stand out for all the right reasons amid a historically expensive stock market.
Why META & AMZN ?
META.
META is the most affordable stock among the "Mag 7," mainly because its business is already benefiting from AI right now.
Having integrated generative AI into its social media advertising platforms, META enables companies to tailor static or video messages to users, thereby improving click-through rates and enhancing the company's already stellar ad pricing power.
As META derives most of its revenue from ads with sales coupled to the health of the US economy, that has been growing, albeit a slowing rate.
Selling ads might not be a game-changing operating model, but companies are still very willing to pay top dollar to advertise with META.
AMZN.
Meanwhile, AMZN's secondary businesses have become its best performers.
While its popular eCommerce Amazon online store still brings in most of its total sales, it is its cloud service, Amazon Web Services (AWS), that brings in most of its actual profits.
Ever since AWS integrated generative AI and large language model solutions into its platform, sales growth for this considerably higher-margin operating segment has reaccelerated.
Combined with strong subscription price increases for Amazon Prime and steady double-digit growth in ad sales, it is easy to see why Wall Street experts expect Amazon's cash flow to more than double between 2025 & 2028.
Although bargains are few and far between at the moment, META and AMZN fit the bill.
Stock Price Performance.
In terms of YTD stock price performance, neither is META or AMZN the top performing stock:
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The top 3 performing stocks are (a) AAPL, (b) NVDA and (c) GOOG.
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AMZN is 4th.
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META is 6th.
With a temporary halt to further tension escalation in the Middle East, bargain hunters will be on the prowl for good buys.
Are META & AMZN really up for consider ? Let’s take a look.
Technical Analysis.
As usual, I will be looking at both META’s and AMZN’s - (a) Simple Moving Averages (SMAs), (b) MACD and (c) RSI, to determine where the stocks’ trajectory will be.
META.
(1) Simple Moving Averages (SMAs).
On Fri, 24 Jul 2026, INTC closed the day at $595.15 /share, trailing its SMA of 20-day ($620.97) and 50-day ($606.17) and 200-day ($638.07). (see above)
The stock price trailing the mid-term and long-term averages, it indicates that META has shifted from its bullish peak into a corrective phase.
The near-term direction will likely be influenced by (a) market digestion of major restructuring moves, and (b) quarterly earnings in a day’s time. (see below)
Lastly, META is still in active “death cross” formation since late Nov/Dec 2025.
(2) MACD.
Both MACD line (7.83) and Signal line (12.33) are below the Zero line, confirms that META is firmly in bearish territory, where bears control the price action.
Further, with MACD line falling below the Signal line, triggers a classic technical sell signal, showing that recent selling pressure is outpacing the longer-term trend.
Divergence at -4.5, shows that the gap between the MACD and Signal lines is widening downward, confirming that selling momentum is gaining speed and not slowing down, yet.
(3) RSI.
With its 14-day RSI coming in at 43.82, it shows that while the stock is falling, there is no panic selling or extreme exhaustion from sellers yet.
During a pullback, the 40 - 50 range as a critical pivot - below 50 confirms bears have the upper hand, and staying above 40 means the medium-term uptrend is trying to hold.
AMZN.
(1) Simple Moving Averages (SMAs).
On Fri, 24 Jul 2026, AMZN closed the day at $232.11 /share, trailing its SMA of 20-day ($243.82) and 50-day ($249.22) and 200-day ($234.59). (see above)
The stock price is trailing AMZN’s mid-term to long-term averages, it indicates that AMZN has shifted from its bullish peak into a corrective phase.
The near-term direction will likely be influenced by (a) market digestion of major restructuring moves, and (b) quarterly earnings in a day’s time. (see below)
Lastly, AMZN is no longer in active “death cross” formation since late Nov/Dec 2025. Instead, it has managed to steer itself around and entered a “golden cross” event since late April/early May 2026.
(2) MACD.
Both MACD line (-1.50) and Signal line (-0.49) are below the Zero line, confirms that AMZN’s dominant medium-to-long-term bearish trend
Further, with MACD line falling below the Signal line, confirming intensifying short-term downward momentum.
Although a ‘smaller’ divergence of -1.04 (compared to META’s -4.5), it still reflects a widening gap, pointing to accelerating selling pressure and further downside risk for AMZN.
Buyers have not yet stepped in with enough force to generate a bullish crossover or a meaningful reversal.
(3) RSI.
With 14-day RSI coming in at 37.49, it is a confirmed bearish markdown phase, (a) showing strong downward acceleration with (b) no signs of immediate trend reversal.
My viewpoints: (mine only)
In short, while META & AMZN offer compelling long-term fundamental value relative to their mega-cap Mag 7 peers.
The technical indicators suggest short-term patience may be warranted as both stocks continue to experience downward price adjustments.
With Nasdaq closing lower on Mon, 27 Jul 2026, it is not a surprise to find both META and AMZN falling in tandem with the US tech index.
Agree ?
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3 of 7 Mag 7 succumb to the Nasdaq pressure and was dragged down. They were META, AMZN and TSLA. Funnily enough it's the 2 shortlisted companies with "most" cash-flow-per-share estimates for 2027. (see attached)
4 of 7 Mag 7 bucked the trend and rose. GOOG (+1.89%) & MSFT (+1.09%) were the top 2 gainers (by percentage).
But will this remain the same till 4pm when trading ends for Wednesday and when FOMC meeting concludes this 2nd day. Will there be an interest hike ? I really don't think so, Warsh will stay "loyal" to him.
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