As Nvidia readied its quarterly results, analysts and strategists were torn on whether investors should default to Overweights in America’s mighty mega-cap monopolies amid pervasive macro uncertainty and the ever-present threat of de-globalization.

Recall from “Whither The Mag7?” that reporting season went well for big US tech. Specifically, the Mag7 ex-Nvidia grew earnings by 28% YoY compared to just 9% for the other 493 stocks in the benchmark. The beat to consensus for the group was 16ppt, the widest in nearly four years.

As a result, current-year earnings estimates for the Mag7 are basically unchanged for the year. As the figure on the left below, from Goldman’s David Kostin, makes clear, the revisions trend is far more favorable for the biggest and “best” than it is for the “rest.”

And yet, concerns linger, one of which is international sales exposure. The figure on the right gives you some context. The Mag7 derives half its revenue abroad versus just 21% for small caps and 28% for the index.

Why’s that a bad thing? Well, as Friedrich Merz put it Monday at a conference in Berlin, “At the moment, we strongly protect US tech companies, including on taxes, but that could change.” That’s not a veiled threat, it’s an open threat.

Merz went on to say he doesn’t want to “escalate” the trade conflict with Donald Trump — rather “solve it together” — but the warning stands and it’s a microcosm of the trend towards a more hostile world. A world where everyone, whether they want to or not, is compelled to look out for their own national interests not just first and not just foremost, but often at the direct expense of other nations and competing trade blocs.

That’s hardly the only threat to Mag7 top- and bottom- lines. There are still widespread concerns that big US tech overspent on the AI buildout. It’s not about whether AI’s actually “for real,” it’s about whether there’s anything like a one-to-one relationship between AI capex and AI innovation.

Still, it’s hard on most days to envision a scenario where these companies fall completely out of favor and/or cede market leadership to businesses that aren’t likewise engaged in the development of new tech. The level of dominance — and, arguably, the concentration risk — is extraordinary, as illustrated by the JPMorgan chart below.

Just as the top 0.1% of society (the super-rich) are relegating the 1% (the “merely” rich), so too are the top 10 corporate “haves” consigning the next biggest names to also-ran status.

Ostensibly anyway, higher long-end Treasury yields are an albatross for long-duration equities, but we’re back to hearing variations on the old “heads Mag7 wins, tails everyone else loses” pitch. That’s the implication from JPMorgan’s chart header.

“In our view, the revival of the ‘higher for longer’ narrative will [mean] investors need to be selective in stock picking, as the cyclical support from a strong growth or the monetary support from Fed cutting will be missing,” the bank’s asset allocation team said, in their latest. “In that scenario, investors will continue to focus on high quality/ growth tech companies which are able to deliver strong earnings at high profit margins.”

Goldman’s Kostin made a similar argument earlier this month. “Without a meaningful improvement in the market’s pricing of the economic growth outlook, small-cap and mid-cap equities will likely struggle to outperform,” he said.

But — and this brings us full circle — not everyone’s prepared to resign themselves to buying the Mag7 for lack of better ideas. SocGen’s Manish Kabra, for example, still likes the equal-weighted S&P, particularly compared to the cap-weighted Nasdaq 100.

Big US tech outperformance was “built on global growth,” Kabra wrote Wednesday, warning that the mega-caps are “expensive and exposed to the reshuffling of supply chains.”