Tech Leaders Wary as Global Monopoly Scrutiny Threatens a Major Shake-Up for the Magnificent Seven

Consisting of Apple, Microsoft, Amazon, Alphabet, Tesla, Meta, and Nvidia, the Magnificent Seven has delivered consistent outperformance in recent years, but it appears that their market dominance could be under threat.

Since its launch in April 2023, Roundhill’s Magnificent Seven ETF (MAGS) has grown more than 120%, buoyed by an AI boom and a series of strategic acquisitions by tech market leaders to reaffirm their position among the world’s strongest stocks by market capitalization.

However, the news in recent days that China has launched an antitrust investigation into global chip giant Nvidia under suspicions that the company has violated its anti-monopoly laws is the latest blow in a series of regulatory pushbacks against the global dominance of Wall Street’s biggest players.

Trade Wars Disrupt Tech

China’s decision to investigate Nvidia (NASDAQ:NVDA) stems from a 2020 deal to acquire Mellanox Technologies Ltd. The State Administration for Market Regulation alleged that approval was granted for the deal on the condition that the tech giant did not discriminate against Chinese companies.

The $7 billion acquisition was approved provided that the Israeli computer networking manufacturer provided information about new products to rivals within 90 days of making them available to Nvidia. It’s this aspect of the deal that China is looking to scrutinize.

However, the timing of the investigation is crucial. President-elect Donald Trump has been vocal in his pledges to impose heavy tariffs on trade with China. While a 60% tariff was threatened on the campaign trail, in November, Trump suggested that an additional 10% tariff would be placed on all trade with the nation.

Although Trump has suggested that the tariffs are a response to drugs like fentanyl being exported to the US, the President-elect has long adopted an aggressive stance towards China, which may complicate the growth of globally-focused Wall Street firms.

Nvidia appears to be caught up in an emerging trade war between the US and China, and given that the Asian powerhouse makes up around 17% of the firm’s revenue, the outcome of the investigation could be a troubling time for the tech leader that had been on course to sell $12 billion worth of chips to China in 2024.

Google in Antitrust Hot Water

Search engine giant and its owner, Alphabet (NASDAQ:GOOGL), were found to have violated antitrust laws as the firm created a tech empire, according to a federal judge in August 2024.

The judge found that Google violated section 2 of the Sherman Act, with accusations that its services and advertising kept users locked into the company in a way that prevented the emergence of competitors.

The fallout from the trial saw GOOGL fall 11.6% from its July 2024 peak by the end of November, with fresh uncertainty over what the future holds for its tech empire at a time of accelerating innovations.

In November, the US Department of Justice suggested that Google divest its Chrome internet browser as a remedy in the wake of the case.

The DOJ also ruled that Google should be prevented from entering into exclusionary agreements with third parties like Apple and Samsung in a move that could open the door for more competitors to capture market share in the future.

Crucially, the department suggested that Google be prohibited from giving preference to its search service within its other products.

AI Could Destabilize Tech Leaders

These antitrust investigations are taking place against the backdrop of a tech boom powered by artificial intelligence.

OpenAI recently launched ChatGPT Search in a move that saw Google quickly begin testing its own real-time conversational search function.

With data suggesting that as much as 20% of searches in 2023 occurred without the use of a keyboard, voice search powered by AI could be a key battleground for dominance among the world’s biggest tech firms.

Fresh scrutiny over the market monopolies that leading tech companies are building could open the door for fresh competitors to destabilize Wall Street’s status quo among the Magnificent Seven.

Should Investors be Wary of the Magnificent Seven?

Renewed scrutiny over the market dominance of Magnificent Seven firms comes at a time when markets haven’t been so concentrated at the top since 1960. Today, the Magnificent Seven account for 30% of the S&P Index in terms of capitalization, which may be challenged as new innovations, especially when it comes to transactions transparency, bring fresh opportunities.

With a trade war between the US and China beginning to accelerate, and greater industry scrutiny of tech giants like Google, the Magnificent Seven could see some new challenges emerge in 2025 even as the Trump administration is expected to support a pro-growth outlook for Wall Street.

The brightest global tech stocks have proven themselves time and again, and it’s reasonable to expect that their growth will continue for the foreseeable future, but the impressive 120% rally of Roundhill’s Magnificent Seven ETF over the past 18 months may be considerably harder to replicate looking ahead.