With the numerous red lights on on trading platforms these days especially when it comes to the technological sector, one wonders if there are other sectors on which to focus by implementing the so-called "rotation". Gabriel Debach, market analyst of eToro in this interview analyzes the recent investor behavior both foreigners and Italians and notes that the market has stopped considering the tech as the only possible destination: the sector remains central, but lost its monopoly of the performance, in addition to the fact that the Magnificent Seven club no longer exists as we had understood it until now. But the true rotation It goes beyond the simple shift from growth to value: it is a shift from concentration to selection, from monopolistic leadership to more distributed leadership.
As for business square, rotation exists, but it takes a particular form: it occurs by addition, rather than by substitution. Italian investors they didn't buy the Magnificent Seven on the downside, but they preferred follow the trend one step further, towards those who today collect the orders generated by that expenditure, with attention also to the nuclear sector which could help offset theenormous energy necessary to feed the data centers.
“In a world of high dispersion, of more multipolar macro regimes (rates, energy, geography), diversification is not a defensive option but the only rational way to capture the equity risk premium without concentrating idiosyncratic risk,” says Debach.
For several weeks now, despite its ups and downs, the technology sector has begun to suffer significant losses. This has led to talk of investment "rotation." However, looking at the trends, it's difficult to identify it. But does it exist?
Rotation is happening. It's not a mirage, nor a simple narrative shift. It's the empirical reaffirmation of a fundamental market principle: no sector or style leadership lasts forever. In the first half of 2026, we saw it written in the numbers: emerging markets and international equities outperformed Wall Street, small and mid-caps outperformed large caps, value beat growth, and the equally weighted S&P 500 outperformed the traditional capitalization-weighted S&P 500. Even the Magnificent Seven, which for years seemed untouchable, have begun to show signs of weakening. Diversification, considered almost superfluous in the "buy only tech and wait" era, is thus returning to the forefront. Not through theoretical discipline, but through arithmetic.
So have investors become more selective? Is there any data to support this?
When leadership broadens, concentration ceases to be an automatic advantage and selection becomes the difference again. The most powerful signal comes from dispersion. The Cboe S&P 500 Dispersion Index has risen to around 47 points, its highest level since the Covid era. This means the market expects increasingly divergent trajectories among individual S&P 500 stocks. Beneath the surface of the index, the gap between winners and losers is widening. And when dispersion increases, choosing sectors and stocks wisely matters more than simple market beta.
Has the "shift" accelerated since the beginning of last month? In which sectors?
Since the beginning of June, the picture has become even clearer. After the tech sector's meteoric rise from its March lows, the market has shifted its weight toward healthcare, financials, utilities, and industrials. Technology has lost about 5% over the same period, but remains above 29% since the beginning of the year. The message is clear: tech remains central, but the market has stopped considering it the only possible destination. The true rotation, therefore, goes beyond the simple shift from growth to value. It is the shift from concentration to selection, from monopolistic leadership to more distributed leadership. Technology continues to drive a significant portion of the market, but it has lost its monopoly on performance. Above all, some of the big AI winners of 2026 are starting to show signs of instability.
According to some observers, the sector's recent decline is also linked to technical factors, with excessive long positions and the spread of leveraged ETFs. Do you agree?
Positioning has become extremely crowded: in the recent Bank of America survey, 82% of managers cite long exposure to global semiconductors as the most congested trade ever recorded. Added to this is the proliferation of leveraged ETFs on individual stocks and the sector, particularly evident in South Korea. When the Seoul authorities decided to intervene, suspending new products and tightening investor requirements, they implicitly recognized that excessive leverage was amplifying market volatility. The subsequent sharp correction therefore also took on the characteristics of a deleveraging process. The picture was further complicated by the 25 basis point rise in South Korean rates, the first since January 2023, and the temporary moratorium in New York State on the construction of large data centers: signs of growing political and energy resistance to the indiscriminate expansion of AI infrastructure.
Does the Magnificent Seven club as we've seen it so far still exist?
The real transformation of 2026 is the end of the Magnificent Seven as a single market operation. After years in which belonging to the group was enough to attract capital, investors have once again begun to distinguish between those monetizing AI, those financing its development, and those still needing to demonstrate that their investments will generate adequate returns. Performance shows how difficult it has become to consider the Magnificent Seven as a single entity. Since the beginning of the year, an equally weighted basket of the seven stocks has gained 5,3%, less than half the 11,3% recorded by the S&P 500. Only Apple, Alphabet, and Nvidia are outperforming the index, while Microsoft is down almost 18%, Tesla is over 12%, and Meta is just over 3%. Over the year, the group is slightly ahead of the market again, with a 24% gain versus the 22,8% gain of the S&P 500, but the aggregate figure hides a huge dispersion: Alphabet is over 104%, Apple is over 10%, and Nvidia is up just over 10%. gains 57%, while Meta and Microsoft are in negative territory”.
If the club as a whole should no longer be looked at, what should be evaluated within it? You mentioned Apple, which seems to have changed its face lately, do you agree?
The market is reevaluating something different and, in some ways, more difficult to replicate: the advantage of being able to control all consumer access, from the chip to the operating system, from the hardware to distribution control. Apple represents the most interesting paradox. For months, it was described as the great laggard in the race to Artificial Intelligence, yet since the beginning of the year, it has been the best performing stock in the group, up more than 20% and recently updated its all-time high. The most significant detail is that it is only July and Apple has already matched the 14 all-time highs recorded for the whole of 2025. Its winning card lies in the fact that it now owns the hardware, the operating system, the chips, the ecosystem of services, and, above all, the daily relationship with an installed base that exceeds 2,5 billion active devices worldwide. In an industry where AI models could become progressively more interchangeable, control of consumer access may be as important as the superiority of the underlying technology.
Is there rotation in Italy too? Does it have the same characteristics as what we saw in the US?
Rotation is also present in Italy, but it takes a particular form: it occurs by addition, rather than substitution. At the end of June 2025, the banking sector accounted for 36,2% of the FTSE MIB. A year later, it rose to 39,3%. Far from being bypassed, banks have become even more central, driven by the ongoing game of risk: Unicredit over Commerzbank, Intesa Sanpaolo, Monte dei Paschi di Siena, and Banco BPM. This is a figure that at first glance contradicts the very idea of rotation. But it's precisely when looking at what's happening to the rest of the index that rotation becomes clear. Over the same period, the weight of the auto sector plummeted from 12,2% to 6,7%, almost halved, under the weight of the Stellantis crisis and Pirelli's delisting from the main index.
At Piazza Affari, so dominated by the What space do other sectors have in the Italian banking sector?
Technology, which accounted for 2,9% twelve months ago, now stands at 5,6%, almost double. The industrial sector has risen from 7,8% to 9,1%. The result is a FTSE MIB where banks have a greater share in absolute terms, but where marginal growth, which has boosted the index by 17% since the beginning of the year, increasingly comes from outside the banking sector. Banks remain the cornerstone, with a share close to 39% and a contribution of nearly 30% of the approximately €97 billion in capitalization added since the beginning of the year, despite the exit of Banca Popolare di Sondrio from the index.
What about the performance of STM and Prysmian? Were they part of the Italian rotation?
STM alone generated approximately 27% of the overall increase, a contribution almost equivalent to that of the entire banking sector. Its weight in the FTSE MIB rose from 2,7% in February to 5,6% in June. Prysmian followed a similar trajectory, from 3,9% at the end of 2025 to 5,7%, supported by investments in power grids, submarine cables, data centers, and the energy transition. These two stocks, alone, describe the Italian rotation better than any narrative. However, a second phase began in the second half of June. Profit-taking hit some of the biggest winners of 2026, while capital returned to banks, healthcare, utilities, and the stocks that lagged behind. STM and Prysmian themselves demonstrate the downside of the new leadership. STM has lost approximately 21% from its June highs, while Prysmian has corrected 17,8% from its May highs. Profit-taking does not erase the contribution made by the company. to the index's growth, but they are a reminder of how much more volatile the new leadership has become after a very rapid run. The change is also visible in the composition of the FTSE MIB Top 10: the weighting of the top ten stocks has risen from 69,8% at the start of the year to 71,8%, while that of the top three has fallen from 40,6% to 38,7%. The pie is more concentrated at the top of the index, but is more evenly distributed just below the podium.
How Italian investors behaved with respect to megacaps Usa
In the second quarter, Italian investors didn't buy the decline in the Magnificent Seven, preferring to follow the trend a step further, toward those currently cashing in on the orders generated by that expenditure. Data from the eToro platform highlights how, after a first quarter marked by a return to energy stocks following the escalation of conflict in the Middle East, between April and June, Italian retail investors increased their exposure to companies active in two crucial areas for the development of AI: semiconductors and energy supply, with particular attention to nuclear energy.
Are there any US stocks that Italian investors have focused on more?
Marvell and Micron are the companies that best represent this choice: the former in connectivity that allows thousands of processors to communicate with each other, supported by the endorsement of Jensen Huang, who has identified it as a potential next trillion-dollar company; the latter in high-speed memories that power AI systems, confirmed as a supplier of HBM4 for the new NVIDIA platform. Both sectors are essential to supporting the expansion of computing capacity and data centers. And the ranking of "top risers" among Italian users demonstrates this: Marvell Technology takes the top three, with a 65% increase in the number of investors, followed by Micron Technology (+33%), Rocket Lab (+30%), and Take-Two Interactive Software (+26%). The same trend is evident in the presence of Samsung Electronics (+16%), Broadcom (+12%), and Taiwan Semiconductor Manufacturing Company (+8%), confirming widespread interest in various links in the chip value chain.
Have you noticed interest in other sectors and stocks? The nuclear sector, for example?
The bottleneck in the AI race is shifting from chips to the energy needed to power data centers, and so the next chapter is nuclear. Oklo, active in the development of advanced nuclear reactors, saw a 22% increase in the number of Italian investors, while NuScale Power, specializing in small modular reactors, grew by 15%. Cameco, one of the world's leading uranium operators, recorded a 13% increase. The simultaneous presence of companies active in the design of new reactors, modular technologies, and uranium production suggests an interest that spans the entire value chain.
