The Roundhill Magnificent Seven ETF (BATS:MAGS) plunged 4.63% on Thursday in its worst single-day drop in 15 months, as aggressive capital spending on artificial intelligence severely pressured big tech balance sheets amid a decline in dividends and buybacks.
Big Tech's AI Capex Squeeze Signals Market Shift Deconstructing this trend, Fidelity’s Director of Global Macro Jurrien Timmer highlighted that massive capital expenditures are heavily crowding out shareholder returns, driving the group's payout ratio down to 37%.
The payout ratio represents the proportion of a company's cash flow or earnings distributed to shareholders through dividends and stock buybacks.
Timmer noted that the Mag 7 index has "only drifted sideways since October 2025," while its relative price against the broader S&P 500 continues to diverge lower.
With cash flows redirected toward AI infrastructure instead of buybacks and dividends, Timmer asked whether the market is witnessing "the end of an era?" for mega-cap dominance.
