The "Magnificent Seven" could cede leadership to the broader market, if early earnings projections are any indication. As a group, the artificial intelligence darlings are expected to have grown earnings by 20.3% in the third quarter from the year-earlier period. That's a slower rate than the rest of the S & P 500 , which analysts anticipate saw profits expand by 27.7%, per Russell Investments. That would be a stark contrast to the second quarter, when the Mag-7 saw earnings double while the rest of the index's bottom line expanded by 30%, per FactSet. Outperformance for the non-magnificent S & P 493 would come at key point for the stock market, which has chugged along fine on the headline level thanks to the megacaps but has seen its breadth weaken considerably beneath the surface. That's a troubling development that to some implies a broken market. To others, though, it suggests a buying opportunity. "With earnings being much more broad based, and with valuations of some of the, call it, non-hyperscaler companies being a little bit cheaper than the valuation of some of these hyperscaler companies," said BeiChen Lin, head of Canadian strategy at Russell Investments. "I do think it's reasonable to expect that ultimately market performance will also broaden out as well — in addition to just fundamental earnings." The strategist expects the S & P 500 could end the year 5% higher from where it is currently, with the potential for more strength in 2027. Most stocks not participating in rally — yet The Mag-7 is the primary driver why the stock market isn't performing as poorly as the average stock. Thanks to its overconcentration in tech, the S & P 500 reached an all-time high on Tuesday. Nvidia — its biggest component with a roughly 8% weighting — rose to record levels as well. The tech sector also makes up nearly 40% of the S & P 500 in terms of market cap. But the rest of the market hasn't participated of late. The S & P 500 equal-weight is roughly 6% off its record. Meanwhile, 75% of S & P 500 constituents closed September in negative territory. That wasn't the story a few months back, though. Until recently, value was outperforming growth, and small caps were outpacing large caps — all while the Magnificent Seven was virtually flat on the year. That was until a surge in oil prices and bond yields in recent months spurred investors to run back to their old favorites. .MAG7 3M mountain Magnificent Seven, 3-month But the third-quarter earnings season — which begins Thursday with Delta Air Lines and PepsiCo reporting — could make stocks outside of the Magnificent Seven appealing to investors again. FactSet's John Butters noted last week that a record number of S & P 500 companies are issuing positive guidance, an auspicious sign. Stock dislocations To be sure, a broadening in earnings growth won't necessarily translate to more stocks participating in the rally to records, especially when the most punished names in recent months are also the ones most vulnerable to worsening macroeconomic conditions. But investors suspect that many of those same names have been overly punished by this point. Some also expect that the third-quarter earnings season will confirm that strong corporate fundamentals — not prevailing outside forces — will determine where stocks go next. Art Hogan, chief market strategist at B. Riley Wealth, thinks the reporting period will reward those sectors that have been hurt the most, such as small caps and healthcare. He likes financials at this juncture, given that the group was down 7% in September. "Everything that wasn't technology and communication services was just bagged around," Hogan said. "I just think you have an opportunity once some of these banks and credit card companies start reporting to really see a nice bounce." Russell Investments' Lin also said the season should be a continuation of recent quarters — which proved that the AI boom continues to be in its early innings. "This is an environment where companies, from our perspective overall, are, generally speaking, in pretty solid shape financially. And this creates a lot of opportunities for investors, despite, of course, all these headlines that are in fact floating out there," Lin said. "At the end of the day, we think it's important for investors to remember that volatility is a normal part of the market cycle," he added. "And sometimes it is actually that volatility that can create temporary dislocations that allow investors to get in at a better price."