The Roundhill Magnificent Seven ETF (MAGS) has seen strong price action recently in the face of growing macro concerns, like rising rates. MAGS broke $70 on 9/3 and is closing in on 52-week highs. Catalysts from Nvidia (NVDA) earnings alongside abating headwinds from legal concerns at Meta Platforms (META), and Alphabet (GOOGL), as well as fading AI-related software disruption fears for Microsoft (MSFT) have all contributed.
All of this has led to MAGS substantially closing its performance gap to the Other 493, as measured by the Bloomberg 500 ex. Magnificent Seven index. As of 9/3/2026 close, MAGS is trailing the Other 493 by 2.7% on a price basis, versus a trough of -10.2% in mid-August.
Now is this just investor vibes shifting or late August noise? We think it has near-term staying power. Here’s why.
After compressing for most of the year, Magnificent Seven earnings per share (EPS) growth expectations for the next 12-months have risen faster than the rest of the index. The Other 493 expected growth was virtually in-line with the Magnificent Seven from mid-March through mid-July, but has reversed sharply lately. Magnificent Seven EPS growth expectations are now 12.3% higher than the rest of US Large Cap, which is back near a 52-week high.
The driver has been stronger EPS revisions for the Magnificent Seven. From late-May to mid-August, revision trends were slightly stronger outside the Magnificent Seven. NVDA earnings were a major catalyst to change that trend for 2027 and 2028 estimates.
Excess earnings growth expectations building for the Magnificent Seven has not really moved valuations. As of 9/3/2026 close, the Magnificent Seven is trading at 25.1x trailing EPS compared to 20.9x for the Other 493. That spread is near a 10-year low. That’s attractive when we consider an above average projected EPS growth gap. Combined, this leads to an attractive PEG ratio with the Magnificent Seven trading below the Other 493 and the all-important 1.0 level. As a rule of thumb, a PEG ratio above 1.0 is considered overvalued, while a PEG ratio below 1.0 is considered undervalued.
To be fair, there are concerns at a macro level, notably rising rates. And, the spike in oil. Our recent market commentary highlighted rates as the bigger risk to the broader market rather than oil.
Based on this, we believe MAGS sets up well here. Compared to the Other 493 it has been less reliant on lower rates over the past year. Looking at the connection to falling rates, MAGS had lower correlations for all the major points across the yield curve.
Overall, the fundamental story is supportive of the Magnificent Seven. Stronger revisions, which have led to a better EPS growth outlook, are not reflected in relative valuations, which are still near 10-year lows. Also, this move into Mega Cap Growth could provide some resiliency from macroeconomic risk, notably rising rates, which have been headlining grabbing during the recent move higher in US yields.
To learn more about MAGS and its current holdings, click here: https://www.roundhillinvestments.com/etf/mags/
Glossary
Bloomberg 500 ex Magnificent 7 Price Return Index: A float market-cap weighted benchmark designed to measure the most highly capitalized US companies, excluding members of the Bloomberg Magnificent 7 Index.
Bloomberg Magnificent 7 Price Return Index: An equal-dollar weighted equity benchmark consisting of a fixed basket of 7 widely-traded companies classified in the United States and representing the Communications, Consumer Discretionary and Technology sectors as defined by Bloomberg Industry Classification System (BICS).
EPS (Earnings per share): A company's net income subtracted by preferred dividends and then divided by the number of common shares it has outstanding.
Trailing P/E (Price to earnings ratio): A financial metric that shows the relationship between a company's current share price and its earnings per share over the past year, providing investors with a retrospective valuation measure.
PEG Ratio (Price to earnings ratio): A valuation metric that adjusts traditional earnings multiples by factoring in a company's expected growth rate.
Investors should consider the investment objectives, risk, charges and expenses carefully before investing. For a prospectus or summary prospectus with this and other information about Roundhill ETFs please call 1-855-561-5728 or visit the website at www.roundhillinvestments.com/etf/mags/. Read the prospectus or summary prospectus carefully before investing.
Investing involves risk, including possible loss of principal. The Fund expects to have concentrated (i.e., invest more than 25% of its net assets) investment exposure in one or more of the Technology Industries at any given time, which may vary over time. Further, the Fund expects to obtain such investment exposure by transacting primarily with a limited number of financial intermediaries conducting business in the same industry or group of related industries. As a result, the Fund is more vulnerable to adverse market, economic, regulatory, political or other developments affecting those industries or groups of related industries than a fund that invests its assets in a more diversified manner. The value of stocks of information technology companies and companies that rely heavily on technology is particularly vulnerable to rapid changes in technology product cycles. Please see the summary and full prospectuses for a more complete description of these and other risks of the Fund.
Roundhill Financial Inc. serves as the investment advisor. The Funds are distributed by Foreside Fund Services, LLC which is not affiliated with Roundhill Financial Inc., U.S. Bank, or any of their affiliates.