Magnificent-7 Era Fading? Crypto Stocks Step Into the Spotlight

But according to Bank of America strategists, that era of one-sided leadership may be reaching its limits.

Savita Subramanian, head of U.S. equity and quantitative strategy at BofA, told clients that history suggests the megacap rally could soon give way to broader market participation. If the Federal Reserve begins cutting rates and the economic cycle shifts into recovery mode, she argues, investors may start favoring smaller and more diversified stocks over a few household names.

Echoes of the Dot-Com Era

The Magnificent-7 — Apple, Tesla, Microsoft, Alphabet, Amazon, Meta, and Nvidia — powered much of Wall Street’s growth over the past several years. But their dominance has shown cracks in 2025. Apple and Tesla, for instance, have struggled to reclaim their 2024 highs amid trade tensions and tariff fears. Meanwhile, smaller companies across the S&P 500 have quietly been closing the performance gap.

Bank of America’s research points out that the 50 largest U.S. companies have beaten the S&P 500 by more than 70 percentage points since 2015. The last time such a divergence occurred was during the late 1990s, just before the dot-com bubble burst. After that collapse, the market flipped — smaller and value-focused stocks outperformed for years while tech leaders stumbled.

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What Comes Next?

If that pattern repeats, BofA expects megacap growth to cool off while value names and small-cap stocks gain momentum. Rate cuts would amplify the rotation, especially if inflation remains a tailwind for more cyclical sectors. Such a shift would mark one of the most significant narrative changes for U.S. equities in a decade.

Crypto Stocks Join the Conversation

Adding another twist to the story is the rapid rise of crypto-related equities. Bitcoin adoption has fueled staggering gains for Michael Saylor’s Strategy (MSTR), which has embraced a treasury strategy centered on the cryptocurrency. Trading platform Coinbase has also rallied alongside surging digital asset volumes, while other blockchain firms are riding the wave of institutional interest.

The spotlight on stablecoins, which U.S. banks are beginning to experiment with as reserves, further reinforces the sense that digital assets are breaking into the mainstream — and even competing with traditional stock market darlings for investor attention.

Outlook

The Magnificent-7 are unlikely to vanish from relevance anytime soon. But Bank of America’s warning is clear: the days of unquestioned dominance may be numbered. If history repeats, leadership could broaden across the S&P 500, with small-cap and even crypto-linked names emerging as serious contenders in the next phase of the bull market.

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