Are Hyperscalers Still Magnificent?

With the exception of Alphabet, which has generated stellar returns over the past one, three, and five years, the other three hyperscalers' stocks have struggled mightily in 2026. The key lesson we have learned is that the semiconductor sector is notoriously cyclical, both in business cycles and in stock prices. Revenue of $35.5 billion was up 198% year over year, crushing consensus estimates, and the company’s net income surged 398%. The market always sniffs out a peak in earnings growth acceleration well before the cycle turns. From mid-April 2025 through June 30, our Composite is up 25%, a relative pittance compared with the 90% gain for the Invesco S&P 500 Momentum ETF. The following segment was excerpted from the Wedgewood Partners Q2 2026 Client Letter. Are the Magnificent 7, particularly the hyperscalers, still magnificent? We certainly think so and have increased our weightings accordingly. Recall the Mag 7.