One corner of the market is rebounding in a big way as stocks and bonds both come under pressure: the “Magnificent Seven.” The tech giants surged to all-time highs this week, a surprising show of strength given that the group has floundered for much of this year with the artificial intelligence trade broadening away from megacaps. The Roundhill Magnificent Seven ETF (MAGS) is higher by 5% this month through Wednesday’s close, far more than the S & P 500’s slight advance over the same time period. Meta Platforms has been the leader of the move, with the stock rallying more than 30% this month after unveiling its artificial intelligence agent, Muse . There’s another reason why investors might be drawn to the Magnificent Seven: The group’s scale, cash flow and balance sheets make it a safe haven in a rising interest rate environment that can punish both stocks and bonds. MAGS mountain 2026-09-01 MAGS in September “I think the hyperscalers more broadly make a lot more sense than holding bonds,” said David Miller, chief investment officer at Catalyst Funds. “If you think about it intuitively, if you have a choice, you can own equities that have revenue growing well into the teens.” “Or you can choose a situation where you’re buying something that is essentially a currency bet, specifically bonds, where you’re getting back this long-term yield from those bonds, but the country is deliberately running a very large deficit that it can’t afford to pay,” Miller added. Yields, MAGS moving higher together Bonds have taken a beating of late. On Wednesday, the 10-year U.S. Treasury yield leapt to fresh 19-year highs, after the latest economic data came in hotter than expected, raising the likelihood of even more rate hikes than the Fed has already signaled. The 30-year bond yield on Thursday spiked to levels not seen since 2004. Tech stocks have historically been under pressure when rates rise, as the higher borrowing costs make it more difficult for companies in the space to grow their businesses. The MAGS ETF, however, has been following yields higher recently. The fund is up 15% over the past three months. The 10-year Treasury yield, meanwhile, has climbed above 5.1% from around 4.4% in that time. Valuations are also playing a factor in the Magnificent Seven’s move higher, after the group’s multiples fell to historic lows . Weak investor sentiment around the companies, which were also starting to show returns on AI investment, compressed their stock multiples. But the prospect of higher interest rates has given investors few places to go, as has ballooning U.S. debt — which has deterred some investors from holding Treasurys, driving them instead into megacap stocks, where massive demand for AI data centers is likely to ensure a return. Data centers over bonds That extends to the corporate debt markets as well. Billionaire investor Howard Marks was asked on Tuesday on CNBC’s ” Squawk Box ” whether lending to a hyperscaler is as “safe” a trade as loaning money to the U.S. government. The co-chairman of Oaktree Capital Management implied that AI data centers could be a more worthwhile bet — even if it is not regarded as safer than Treasurys. “I think that the hyperscaler at 8% may have a higher expected return than the Treasury at 5%, because I think it has a rather low risk of default,” Marks said during the broadcast. What’s clear is that the comeback in megacaps has illustrated that investors are not leaving the stock market at all, even if they are getting more selective about where they add exposure.
