The Magnificent 7 Trade Is “Likely Over,” Piper Sandler Warns. Here Are the 2 Sectors Taking Its Place

On CNBC's Morning Call Sheet roundtable connected July 29, Piper Sandler main marketplace technician Craig Johnson made a steadfast telephone against the Magnificent 7 and explained wherefore helium alternatively prefers the Health Care and Financial sectors today.

"The Mag-7 commercialized [has] been precise agelong successful the bony for a while, and it's apt over, and you're seeing a reset happening," Johnson said. "It's conscionable not astir the Mag-7. It's conscionable not astir the semiconductor stocks. And it's a marketplace that's rotating into different parts of the market. We're seeing wide pickups successful Health Care. We're seeing pickups successful Financials."

The Numbers Show Market Leadership Is Already Broadening

The Invesco QQQ Trust (NASDAQ:QQQ), 1 of the easiest ways to get a work connected the tech manufacture arsenic good arsenic the Mag-7, is up 9.96% twelvemonth to day done July 28, 2026, but it has fallen 4.72% implicit the past week and 4.39% implicit the past month.

The Health Care Select Sector SPDR Fund has gone the different direction, rising 4.37% successful the past week and 8.97% twelvemonth to date, portion the Financial Select Sector SPDR Fund has gained 7.52% implicit the past period and 6.07% twelvemonth to date. For comparison, the wide S&P 500 is up 8.64% twelvemonth to date.

Johnson said Piper Sandler has been acting connected this thesis for months. "We proceed present astatine Piper Sandler to chopped backmost our exertion weighting crossed the board. And we person been since February. It is clip to instrumentality profits successful tech."

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Microsoft Short Interest Is Flashing a Decade-High Warning

Johnson zeroed successful connected Microsoft (NASDAQ:MSFT) and the informing awesome he's seeing. "Short involvement is the highest percent of the interval since 2015, and we've seen the largest summation successful abbreviated involvement successful Microsoft of immoderate of the Mag-7."

That sentiment displacement contrasts with Microsoft's operating results. In Q3 FY2026, the institution reported EPS of $4.27 connected gross of $82.89B, up 18.3% twelvemonth implicit year, with Azure increasing 40% and its AI concern surpassing a $37 cardinal yearly tally rate, up 123% twelvemonth implicit year. Yet the banal is down 18.3% year-to-date and 22.63% implicit the past twelvemonth done July 28, 2026. Capex of $30.88B successful the quarter, up 84% twelvemonth implicit year, is investigating capitalist patience connected AI payback timelines.