The “Magnificent Seven,” a term referring to a select group of prominent technology stocks, is facing significant turbulence as the week wraps up, with many investors expressing doubts about the sustainability of the high valuations and extensive spending associated with the ongoing artificial intelligence (AI) boom. On Friday morning, shares of leading chipmaker Nvidia (NVDA) fell approximately 3% in early trading. This decline came in the wake of remarks from a former Trump administration official stating there would be no federal bailout for AI initiatives, coupled with comments from Nvidia’s CEO, Jensen Huang, concerning the United States potentially losing the AI arms race to China. Overall, Nvidia’s stock has seen a decline of more than 9.5% over the course of the week, marking its most significant drop since April.
In a similar vein, shares of Meta (META) and Microsoft (MSFT), both of which have unveiled considerable spending plans for the year, also experienced downturns, with losses of around 2.5% and 0.5%, respectively. Over the last five days, these companies have seen their stock value decrease by more than 4%.
The sentiment in the tech sector faced additional pressure after the market closed on Thursday, when Tesla (TSLA) shareholders overwhelmingly approved a staggering pay package for CEO Elon Musk, which could be valued at up to $1 trillion. Consequently, Tesla’s stock saw a further drop of approximately 3.5% on Friday. Musk stated during the Tesla shareholder meeting that the company would need to significantly expand its chipmaking capacities to support its autonomous electric vehicle ambitions, hinting at a possible collaboration with Intel on this endeavor.
Intel (INTC), although not categorized within the Magnificent Seven, saw a slight uptick of around 1% on Friday morning, standing out as one of the few gainers amidst the broader losses in Big Tech.
In terms of market performance, Alphabet (GOOG) and Amazon (AMZN) were both trending towards losses exceeding 1%, while Apple (AAPL) was on track for a modest gain of just over 0.2%, defying the negative trend affecting most of its peers. Other chipmakers, such as AMD (AMD) and Broadcom (AVGO), also faced challenges, with both experiencing declines of more than 2% on Friday, and projected weekly losses of over 9% and 5%, respectively.
Investors appear to be reassessing their positions in these dominant tech stocks, amid growing concerns about the trajectory of the AI sector and higher costs projected in the coming quarters.
