Tech stocks post best 6 months since 2023 — even with much of the 'Magnificent 7' in the 'penalty box': Chart of the Day

Tech stocks post best 6 months since 2023 — even with much of the 'Magnificent 7' in the 'penalty box': Chart of the Day Ines Ferré · Senior Business Reporter Updated Tue, June 30, 2026 at 10:44 PM GMT+2 3 min read SOXX GOOGL GOOG MSFT ^GSPC The Technology ( XLK ) sector notched its strongest first half of the year since 2023, when the artificial intelligence boom first drove equities significantly higher. The sector has rallied roughly 33% year to date as investors piled into companies building the infrastructure behind the AI boom. Much of those gains have come since the market bottomed on March 30 as the US-Iran conflict wreaked havoc on stocks.

Tech stocks have soared more than 40% since then, with the Energy ( XLE ) and Industrials ( XLI ) sectors following. The V-shaped recovery over the past three months has helped the broad-based S&P 500 ( ^GSPC ) notch its best quarter since 2020. But while the "Magnificent Seven" megacap stocks were the drivers of the tech sector three years ago, their performance in 2026 has been anything but magnificent.

If anything, Big Tech players that plan to spend more than $650 billion on AI this year have been punished, as the returns on those investments remain hazy. "Investors seem to be experiencing AI Fatigue," veteran market strategist Ed Yardeni wrote in a recent note. "They are questioning whether the hyperscalers' massive spending on AI infrastructure will ever pay off.

" Read more:  How to protect your portfolio from an AI bubble 'A bifurcated market' Software and cloud provider Microsoft ( MSFT ) is down 22% since the start of the year. Meanwhile, social media giant Meta ( META ) has lost about 15% over the past six months. Alphabet ( GOOG , GOOGL ), Apple ( AAPL ), and Nvidia ( NVDA ) are up 12%, 6%, and 6%, respectively, since the start of the year.

"Those are the ones that are all almost getting put in the penalty box [with] a lot of them getting treated like bear market stocks," Dan Ives, managing director and senior equity research analyst at Wedbush Securities, told Yahoo Finance on Monday. "I think right now, you're really seeing a bifurcated market," he added. Semiconductor stocks versus the "Magnificent Seven" during the first half of 2026.

But investors have been more enthusiastic about companies that make critical AI components than about the big spenders. Highfliers include memory, storage, and chip plays like Micron ( MU ), Western Digital ( WDC ), Seagate ( STX ), and Intel ( INTC ), which have all risen well above 250%. The Philadelphia Semiconductor Index ( SOX ) posted its best quarter on record.

Meanwhile, the iShares Semiconductor ETF ( SOXX ) surged a staggering 110% year to date. If those gains hold through year-end, 2026 would mark the best calendar year in the ETF's history. Investor appetite for IPOs has also remained strong, highlighted by SpaceX's ( SPCX ) record-breaking public debut after the Elon Musk-led company raised more than $75 billion .

AI developer Anthropic ( ANTH. PVT ) is also expected to go public this year. OpenAI ( OPAI.

PVT ) has filed for an IPO, though a recent report said the company could delay its debut as it seeks to reach a $1 trillion valuation. Story Continues Going into the third quarter of 2026, Wall Street remains bullish on tech, with industry analysts predicting a 21% gain in the S&P 500 over the next 12 months, according to FactSet . Micron shares are up roughly 300% year to date amid a memory shortage driven by the AI boom.

(Reuters/Dado Ruvic) · Reuters / REUTERS "You have to see, as we go into earnings season in July, the validation and monetization of AI," Ives said. The AI boom is expected to fuel the broader index, with JPMorgan analysts recently upping their year-end forecast to 7,800 by year-end. While the strategists warned that overcrowding in AI-related stocks could trigger a "flash crash," they argued that any pullback would present a buying opportunity.

Yardeni Research concurs with that view. The firm, which correctly called the March 30 market low and soon after raised its year-end S&P 500 target to 8,250, also sees any market weakness as an opportunity to buy. Ines Ferre is a senior business reporter for Yahoo Finance.

Follow her on X at @ines_ferre .