Retail Investors Are Moving Beyond the 'Magnificent Seven'

For years, the Magnificent Seven dominated retail portfolios and powered much of the US stock market's gains.

Now, fresh data suggests that relationship may be changing.

According to Vanda Research, retail inflows into Microsoft, Apple, Amazon, Meta, Nvidia, Alphabet and Tesla have slowed, while investors are increasingly allocating capital to AI infrastructure plays, including semiconductor manufacturers, memory suppliers and data centre-related companies.

The shift suggests retail investors are rotating within the AI theme, rather than abandoning it altogether.

Individual investors are also looking further down the market-cap spectrum in search of higher growth potential.

Software executive Alex Cardona told Bloomberg that he has built much of his portfolio around AI infrastructure companies such as Equinix and Marvell Technology, while keeping only limited exposure to the Magnificent Seven.

"Through pure thematic investing, I can concentrate my firepower on Marvell — companies that many people may not even have heard of."

The trend is supported by recent fund flow data.

Since the beginning of July, retail investors have purchased around $194 million of Intel shares, compared with approximately $52 million flowing into Microsoft, the strongest performer among the Magnificent Seven over the same period.

Cloud infrastructure company IREN has also attracted fresh retail buying.

Analysts believe investors are becoming more selective as the AI trade matures.

As Vanda Research noted:

"Retail investors are no longer blindly buying the Magnificent Seven. They're becoming increasingly selective, buying the names they have the highest conviction in."

The shift does not necessarily signal weaker retail participation.

According to Citadel Securities, retail equity trading reached record levels in May and June, with average daily trading volumes more than doubling compared with 2024.

Instead, investors appear to be looking for the next stage of the AI trade, focusing on companies tied to semiconductors, memory, power infrastructure and data centres rather than the largest technology firms.

For now, the AI investment story remains intact.

The difference is that retail investors are increasingly looking beyond the biggest names, betting that the next wave of AI winners may come from the companies building the infrastructure behind the technology, rather than the platforms already dominating the market.