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Mag-7 stocks rebounded sharply by 16% in Apr26 (Mar26: -5%), outperforming the S&P 500 (+10.4%) and broadly in line with the NASDAQ (+15.6%). The rally was driven by the US-Iran ceasefire on 8 April, easing oil price concerns, strong 1Q26 earnings beats across the hyperscalers, and renewed investor confidence in AI monetisation. GOOGL (+33.7%) led the gains on accelerating Google Cloud growth of 63%, followed by AMZN (+27.5%) on the strongest AWS growth in 13 quarters.
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Mag-7 (ex-NVDA) companies broadly beat CY1Q26 expectations. Excluding Nvidia, Mag-7 earnings rose 10% in 1Q26. Google Cloud accelerated to 63% YoY growth, and AWS posted its strongest growth in 13 quarters, validating the AI infrastructure spend thesis. META raised its FY26 capex guidance to US$125-145bn (from US$115-135bn), while AMZN maintained its industry-leading ~US$200bn capex plan, both of which reignited near-term margin concerns. TSLA beat 1Q26 EPS at US$0.41 (consensus: US$0.27) despite deliveries missing estimates.
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We maintain OVERWEIGHT on the Mag-7. The April rebound has lifted valuations to ~25x forward PE, but the re-rating reflects strong 1Q26 earnings, robust cloud and AI momentum, and easing geopolitical risk. Net cash balance sheets, robust free cash flow and long-term energy agreements continue to insulate the group from cost pressures, while accelerating AI monetisation underpins earnings growth that outpaces the broader market. Excluding TSLA, Mag-7 earnings will continue to outpace the S&P 500 and Nasdaq 100, anchored by non-cyclical demand and the US AI Action Plan.
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