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

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Tech stocks on pace for 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 Tue, June 30, 2026 at 6:00 AM EDT 3 min read SOXX GOOGL GOOG MSFT ^GSPC The Technology ( XLK ) sector is on pace to notch its strongest first half of the year since 2023, when the AI boom first drove equities significantly higher. The sector has rallied roughly 28% year to date as investors piled into the 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 37% since then, with the Energy ( XLE ) and Industrials ( XLI ) sectors following. The V-shaped recovery over the past two months has put the broad-based S&P 500 ( ^GSPC ) index on track for its best quarter in six years. 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 strategist Ed Yardeni wrote in a recent note. "They are questioning whether the hyperscalers' massive spending on AI infrastructure will ever pay off." Software and cloud provider Microsoft ( MSFT ) is down 22% since the start of the year and is about to close out its worst month since the year 2000. Meanwhile, social media giant Meta ( META ) is also down 14% over the past six months. Alphabet ( GOOG , GOOGL ), Apple ( AAPL ), and Nvidia ( NVDA ) are up 12%, 4%, and 3% respecivetly. "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. 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 more than 200% since the start of the year, sending the iShares Semiconductor ETF ( SOXX ) up a whopping 100% year to date. If those gains hold for the rest of the year, it would take out 2003 as the best year for the index on record. 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. 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 . "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 . Read the latest financial and business news from Yahoo Finance

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