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Mag-7 stocks’ recovery continued in May26, up 5.4% (Apr26: +16%), outperforming the S&P 500 (+4.5%) but underperforming the NASDAQ (+7.4%). The continued rally was driven by continued AI and cloud momentum and resilient earnings, with tech strength broadening beyond the mega-caps, alongside stock-specific catalysts across the group. TSLA (+11.5%) led the gains on the launch of FSD (Supervised) in China and rising optimism ahead of its Austin robotaxi rollout, followed closely by AAPL (+11.4%) on resilient iPhone 17 demand and clearer visibility into its AI roadmap. GOOGL (-1.6%) was the only laggard this month, from dilution concerns tied to its US$80bn equity offering.
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SpaceX completed the largest IPO in history on 12 June, listing on the NASDAQ (ticker: SPCX) at a ~US$1.75tn valuation and closing its first day ~19% higher. When SpaceX joins the NASDAQ-100 (expected early July), index funds will need rebalance their weightings which could weigh on Mag-7 prices in the near term.
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We maintain OVERWEIGHT on the Mag-7. The continued recovery in May has lifted valuations to ~25.7x forward PE, but the re-rating reflects strong 1Q26 earnings (up 10% YoY) and resilient AI and cloud momentum. The month’s news reinforces our thesis that the AI-infrastructure leaders (NVDA, MSFT, AMZN, GOOGL) are pulling ahead, while META, AAPL and TSLA face more idiosyncratic headwinds (execution and capex, an unproven AI roadmap, and a stretched valuation, respectively). Net cash balance sheets and accelerating AI monetisation continue to underpin earnings growth that outpaces the broader market.
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