It’s human nature to want more of a good thing.
That’s how we ended up with 10 Fast & Furious movies (and counting). It’s also how Tom Brady scored his seventh Super Bowl ring, with the Buccaneers, after being cast off by the Patriots.
When you’ve had a taste of greatness, it’s normal to keep pushing.
This same logic can be applied to the stock market. The S&P 500 is up big again, for a third straight year. It’s been a veritable bonanza for 401(k)s everywhere. Yet there’s a clear dividing line between the haves and have-nots: exposure to the Magnificent 7.
Yes, the annual percentage return for the S&P 500 has been solidly in the teens and mid-20s in recent years, but the Mag 7’s gain over similar periods have dwarfed that.
Even though everyday investors have been doing just fine, it’s normal to have a bit of FOMO about a trade that’s doing even better. And although the S&P 500 is naturally weighted towards the Mag 7, why not aspire for more?
This all begs the question: When will the other 493 companies in the S&P finally feel the same love that the Mag 7 has enjoyed these last couple of years?
The answer is: potentially soon! At least if the likes of HSBC are to be believed.
While HSBC’s S&P 500 price target of 7,500 — and its reasons for bullishness — are largely in line with consensus, the firm’s view that the S&P 493 could start catching up to the Mag 7 commands attention.
The main argument is that continued heavy capital spending will slow Mag 7 earnings growth (except for Nvidia, from which the other companies will be buying).
This is reflected in the chart below, which shows Mag 7 earnings growth (gray line) converging with S&P 493 profit expansion (black line) throughout 2026 after years of outpacing it.
HSBC
“That could open the door for companies outside the Magnificent 7 to outperform,” HSBC’s strategists wrote, noting that outsized earnings growth has been key for the tech elite.
This expansion of returns — known as breadth — will be particularly key for stock-pickers who make their hay when there are more gains to go around. It will also be a key sign of health for skeptics wary of heavy tech concentration.
If it pans out, it should be enough to placate investors hungry for more. Then it’s on to the next aspirational frontier.