Investors are expressing growing skepticism about the sustainability of the remarkable valuations and spending levels seen in the technology sector, particularly among the so-called “Magnificent Seven” stocks. As of Friday morning, these leading tech companies were poised for significant weekly losses.
Chipmaking titan Nvidia (NVDA) was among the hardest hit, with shares dropping approximately 3% within the first hour of trading. Concerns were amplified by remarks from a Trump administration official, who stated emphatically that there would be “no federal bailout for AI.” Additionally, CEO Jensen Huang’s comments regarding the potential risks of the U.S. losing the AI arms race to China added to the negative sentiment. For the week, Nvidia’s stock was on track for a decline of more than 9.5%, marking its worst performance since April.
Other heavyweights in the sector saw declines as well. Meta (META) and Microsoft (MSFT) also experienced downward pressure, with their shares dropping about 2.5% and 0.5%, respectively. Both companies had previously announced ambitious spending plans for the year, contributing to their more than 4% losses over the last five days.
In a surprising twist for Tesla (TSLA), the company’s shareholders approved a staggering pay package for CEO Elon Musk that could reach up to $1 trillion. Despite this substantial vote of confidence, Tesla’s stock fell another 3.5% on Friday morning, amidst the broader downturn in tech stocks. During the recent shareholder meeting, Musk indicated that Tesla would need to ramp up its chipmaking capabilities to enable its autonomous electric vehicles, hinting at a potential collaboration with Intel (INTC) to achieve this goal.
Interestingly, Intel, although not a member of the Magnificent Seven, was one of the few stocks in the tech sector showing gains, climbing about 1% in early trading. Meanwhile, other tech giants like Alphabet (GOOG) and Amazon (AMZN) faced losses of over 1%. Apple (AAPL) managed to escape the downward trend, with its stock inching upwards by around 0.2%.
Chipmakers AMD (AMD) and Broadcom (AVGO) were also affected, each down over 2%, leading them toward weekly losses exceeding 9% and 5%, respectively. The overall environment reflects a challenging landscape for major tech firms as skepticism lingers over their financial trajectories in light of soaring expenditures and market dynamics.
