Mag-7 Is Back: NVDA Leads AI Rally as Azure Hits 40% Growth

The Magnificent Seven has officially re-asserted itself, and the catalyst is exactly who you think it is. $NVDA earnings acted as what IBD's Mike Webster calls a "clearing event" for the entire AI trade, confirming that capital expenditure on artificial intelligence is not only continuing but accelerating. The weekly chart is showing consistent earnings acceleration and what Webster describes as a stable green earnings line, a signal that, sure, sounds dry until you realize it just helped drag a multi-trillion dollar cohort back to the top of the leaderboard.

The other big winner in this resurgence is $MSFT, up a staggering 27% since earnings, powered by Azure cloud growth clocking in at 40% year-over-year. That kind of number does not happen by accident. It happens because enterprises are actually deploying AI workloads at scale, not just piloting them in a PowerPoint. Valuations are also described as becoming "more attractive" as earnings catch up to price, which is the polite way of saying the multiple compression has done some of the work for you already.

But zoom out for a second, because the macro backdrop is doing its best to ruin the party. The August jobs report came in at 162,000 nonfarm payrolls, roughly three times the consensus estimate, which sounds great until Moody's Mark Zandi reminds you that underlying monthly growth is closer to 150,000 once you smooth out seasonal noise. Wage growth has decelerated from nearly 6% in 2022 to around 3%, now below the rate of inflation. Purchasing power is quietly eroding while the headline number looks cheerful. Meanwhile, diesel has hit a record $5.85 per gallon and WTI crude is sitting near $91, adding inflationary pressure that has Fed Chair Kevin Worsh in a genuinely uncomfortable spot ahead of incoming CPI data.

Here is where it gets interesting for the AI trade specifically: the political blowback is building. A bipartisan wave of anti-data-center sentiment is gaining traction heading into midterms, with voters upset about water usage, rising electricity bills, and local job displacement. A viral Liquid Death and Garage Beer campaign mocking data center water consumption, backed by the Kelce brothers, is the kind of pop culture moment that signals a narrative is going mainstream. That is a long-term regulatory risk the market has not fully priced.

On the AI infrastructure side, $ZS (Zscaler) is quietly becoming the security layer that actually matters for agentic AI, while Perplexity's announced partnership with $NVDA on a portable compute product called "DGX Spark" underscores just how central Nvidia remains to every layer of the AI stack. NVIDIA is reportedly weighing an investment in Perplexity at a valuation north of $30 billion. When the pick-and-shovel company is also backing the app layer, that is not a bubble. That is vertical integration with extra steps.

The Mag-7 comeback is real, the earnings are real, and Azure at 40% growth is not a vibe, it is a revenue line. The question is whether a record diesel price and a Fed that may have no political cover left can let this rally breathe long enough for the rest of the market to catch up.