The global funds abandoning the Magnificent Seven

The logos of US technology firms Google, Apple, Meta Platforms, Amazon and Microsoft on a smartphone. Photo: Thomas Fuller/SOPA Images/LightRocket via Getty Images.

Last week’s software rout tells us that investors increasingly view artificial intelligence (AI) as a force capable of seriously disrupting once formidable companies, undermining some of our assumptions about competitive “moats”.

But it’s worth remembering that some of the businesses most obviously focused on building out an AI proposition are also seen as potential victims of the theme, too.

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This is most obvious when it comes to the Magnificent Seven cohort. While Apple Inc (NASDAQ:AAPL) has taken a more restrained approach, the others have embarked on a massive spending spree on AI infrastructure.

Source: FE Analytics, 09/02/2026. Past performance is not a guide to future performance.

Amazon.com Inc (NASDAQ:AMZN), Meta Platforms Inc Class A (NASDAQ:META), Alphabet Inc Class A (NASDAQ:GOOGL) and Microsoft Corp (NASDAQ:MSFT) have unveiled plans to put around $650 billion (£476 billion) into spending on AI and related areas this year alone.

Cognitive as they are of AI’s potential, the spending bonanza has nevertheless unsettled plenty of investors.

Amazon saw its shares tumble last week after it announced plans to put $200 billion into AI spending, and plenty of professional investors have expressed concerns more widely.

We’ve spent plenty of time discussing the fact that global trackers are heavily exposed to the Magnificent Seven, and that stock pickers often take significant exposure to this cohort to lessen the risk of underperforming the market too badly. But investors should closely watch the global active funds they do hold to check any signs of an exodus.

Ditching such shares could pay off if names such as Amazon struggle under the weight of their own spending. Whatever the ultimate outcome, investors can no longer assume global stock pickers are backing such names that heavily.

The funds moving away from the Mag Seven

Some managers have been open about turning away from the US tech mega caps for now.

Take WS Blue Whale Growth I Sterling Acc manager Stephen Yiu, who explained to us last year that he had dropped Meta and Microsoft because the team was “very cautious on AI spenders”, although he does continue to like names on the other end of this spend, such as NVIDIA Corp (NASDAQ:NVDA) and Broadcom Inc (NASDAQ:AVGO).

Fundsmith Equity I Acc, which like Blue Whale Growth does not break out its top 10 position sizes in factsheets (and provides this data to Morningstar on something of a delay), is also showing less conviction in the Magnificent Seven shares it owns.

Microsoft and Meta were often top holdings in the fund, with the latter coming up as the number one position on a 7.7% weighting at the end of August last year. In late 2025, both Meta and Microsoft disappeared from the top 10 list entirely, although Alphabet still made the list at the end of the year, on a 4.8% weighting.

With 4.8% as the lowest allocation for a name in the top 10, it’s likely that Meta and Microsoft now make up a smaller proportion of the fund.

Fundsmith did not respond to a request for comment on the shift earlier this year, but Terry Smith’s annual letter to investors, published in January, did highlight some potential concerns.

He pointed to a “sharp rise in expenditure” at Alphabet, Microsoft and Meta, the three Magnificent Seven stocks Fundsmith Equity owned at the time.

“The tech companies are in a race to build capacity for AI in the 12 form of GPU chips and data centres,” he said.

“Whether this arms race produces adequate profits and returns for the amounts expended remains an open question.”

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Meanwhile, a lesser-known fund with a big focus on AI has turned away from Microsoft for now.

Manchester & London Ord (LSE:MNL), an investment trust that has benefited from enormous positions in Nvidia and Microsoft in recent years, has massively pared back the latter position.

The position size recently fell from around the 22% mark to roughly 4%. Nvidia still accounts for more than 40% of the fund.

Fund manager Mark Sheppard worries that AI is now causing problems for enterprise software providers (one of Microsoft’s business models), while adding: “Over the last year Microsoft have executed extremely badly in developing [AI agent] Copilot relative to how well Anthropic have developed their agent offering.”

Sheppard feels that hardware companies in the AI space are in a stronger position than software names, explaining why the fund maintains its chunky Nvidia stake and now has around 10% apiece in Broadcom and Taiwan Semiconductor Manufacturing Co Ltd ADR (NYSE:TSM).

How exposed are the biggest funds?

The table details some of the biggest active global growth funds out there and how much of the Magnificent Seven they hold in their top 10 list. This data is based on the latest monthly factsheets, most of which come to the end of 2025.

For the MSCI World Index, which many global funds benchmark their performance against and many global index funds track the performance of, the Magnificent Seven account for around 24%.

Source: latest factsheets, and Morningstar for Fundsmith.

As the table shows, a few names were still heavily exposed in recent months.

Royal London Global Equity Diversified M Acc had 6% in Nvidia alone, with 5.2% in Alphabet, 5% in Apple and 4.7% in Microsoft. Schroder Global Equity Z Acc had a substantial 6.8% in Alphabet alone.

Invesco Global Equity Inc UK Z Acc also had a substantial weighting, while Baillie Gifford vehicle Monks Ord (LSE:MNKS) was exposed to five of the Magnificent Seven members within its top 10 holdings list.

And yet others take a restrained approach, at least versus a global tracker. That includes Alliance Witan Ord (LSE:ALW), which did list this as one reason for underperformance last year, as well as Rathbone Global Opportunities Fund I Acc and the troubled Lindsell Train Global Equity A GBP Inc.

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The Rathbones fund has tended to hold a defensive bucket of slow and steady, “weatherproof” companies (including the likes of Costco Wholesale Corp (NASDAQ:COST)) alongside those names it wants to power strong returns.

It has also tended to have a pretty low weighting to the information technology sector, even if its allocation to the US market is especially high at around 75%.

Scottish Mortgage Ord (LSE:SMT) is also quite lowly exposed to the Magnificent Seven, marking a trend that has seen it focus less on those names relative to some years earlier.

Two quality-focused funds, Morgan Stanley Glb Brands Eq Inc I Inc and Brown Advisory Global Leaders B GBP Acc, are also much less exposed than an MSCI World tracker.

The table offers us just a snapshot, and stock pickers are likely to shift their portfolios as the AI situation develops. It’s worth keeping tabs on how such churn could affect your own investments.