Despite blowout earnings results from Meta and Microsoft, the Magnificent 7 — the seven megacap tech stocks once seen as the best way to ride the boom in artificial intelligence — are underperforming the S&P 500 year-to-date, raising fresh questions about how investors should trade the AI rally.

Why it matters: As performance within individual members of the Mag 7 varies, investors may need to look elsewhere to achieve the outsize returns associated with the AI boom.

Driving the news: While Microsoft and Meta reported very strong second quarter results, earnings growth has been moderating for the broader Mag 7.

• To stay ahead in the AI race, many Big Tech companies are spending enormous amounts of money, all while some of their earnings are still growing, but at a slower clip.
• For investors, that could mean more opportunity in other AI corners.

By the numbers: Comparing the performance of the Mag 7 with more AI-centric ETFs makes its slowing gains more evident.

• The AI Supercycle ETF — made up of companies tied to AI data center buildouts — is up 25% this year, the top performing ETF in the sector.
• The Mag 7 is up just over 6% this year, trailing the S&P 500's 8.5% gain.

Zoom in: Part of the underperformance is about specific names dragging down the Mag 7 group: Apple and Tesla, which are both down this year.

• If you exclude Apple and Tesla, the Mag 7 would be up 17.7% year-to-date, according to Roundhill Investments, which runs the MAGS ETF.
• By comparison, Palantir and Broadcom, two AI plays that are not in the Mag 7, are up 111% and 30% year-to-date, respectively.

What they're saying: "I'll actually even argue that the Mag 7 might actually be becoming the Fantastic Four," said Steve Sosnick of Interactive Brokers.

Yes, but: It's far too early to declare the Mag 7 over, as I was told repeatedly while reporting out this piece, but to get proper AI exposure your holdings "can't just be Mag 7," said Dan Ives, a managing director and senior equity research analyst at Wedbush.

• "As the AI revolution spreads, you still have to own Mag 7… but it can't be all your tech portfolio, you need to be exposed to the other derivatives of AI," Ives told Axios. "Not playing Mag 7 in the AI revolution would be like trying to win a baseball game without a shortstop," he added.

The bottom line: Big Tech continues to dominate the market thanks to the huge market caps of these stocks.

• But the AI-fueled spending sprees from these companies are weighing on earnings growth, spurring growth investors to look elsewhere for gains.

Financial sector firms were more likely to face an AI-powered cyberattack in the last 12 months than any other sector, per new research from Deep Instinct.

Why it matters: Financial services firms are ripe targets for cyber criminals because of their vast customer networks, from everyday consumers to major corporations.

By the numbers: 45% of financial services organizations faced an AI-powered cyberattack in the last 12 months, according to the Deep Instinct survey shared exclusively with Axios. Just 38% of experts in other industries said the same.

• 55% of financial services organizations also reported an increase in deepfake attacks, versus 43% of organizations in other industries.
• Deep Instinct, a cybersecurity company that offers AI tools to prevent cyberattacks, polled 500 cybersecurity experts across various sectors in April. The respondents work at firms with at least 1,000 employees.

Driving the news: OpenAI CEO Sam Altman also warned of an "impending, significant fraud crisis" at a Federal Reserve event in Washington last week.

• He said the crisis is coming "very, very soon" in part because of the ways AI can be manipulated to impersonate people.

The big picture: The financial sector is facing an array of AI-enabled phishing, deepfake and malware attacks, Carl Froggett, chief information officer at Deep Instinct, told Axios.

• AI tools have lowered the barrier to entry for these attacks, making it possible for even lower-level cyber criminals to pursue sophisticated attacks, he added.

Yes, but: The financial sector is more resilient than most after decades of cybersecurity investments, Froggett said.

• "Financials really started treating cyber as an upcoming threat in the early '90s," he said. "They've got a big head start on everybody else, they built it into their organizations."

Between the lines: Most organizations, including in finance, have started shifting their cybersecurity strategies from detection and remediation to a fully predictive and preemptive strategy.

• In another Deep Instinct report last month, 82% of organizations said they shifted to a prevention-focused strategy.
• Doing this has forced companies to quickly adapt and update their security playbook. "They went off-cycle (in purchasing new tools) probably because of the success of the attacks," Froggett said.

What to watch: Cyber criminals are still early in adopting these tools, and their skills will only improve as their AI adoption matures.

• "They're only just getting started," Froggett said. "The bad actors are just scraping the surface of what they can do with dark AI."

If you took a nap yesterday afternoon, you missed dissent at the Federal Reserve, Meta and Microsoft earnings, and tariff headlines.

Here is a recap of all the news you need to know from one of the busiest days for markets and the economy in recent memory.

1. Meta posted 22% revenue growth in the second quarter.
2. Microsoft beat estimates on the top and bottom lines, with the stock adding $300 billion to its market cap after hours.
3. The central bank left rates unchanged, though two members dissented.
4. President Trump ended the de minimis exemption, and set 50% tariffs on Brazil and copper.
5. The Treasury offered more buybacks, belly-of-the-curve bonds.
6. And a recall: High Noon may have gotten into your Celsius.