2 ‘Magnificent 7’ stocks see stunning plunges
The decline in “Magnificent Seven” stocks has been particularly painful for Microsoft (MSFT) and Meta (META).
Microsoft is down nearly 35% from all-time highs in October, while Meta is down nearly 34% from all-time highs in August. Incredibly, both stocks are at or near their April 2025 lows during the Trump tariff chaos, although the S&P 500 (^GSPC) is still 32% above that level.
“Unlike the April 2025 sell-off, where the entire market fell sharply and then saw a higher rally as tariffs were rolled back, this sell-off feels very stock-specific,” said Jeff Jacobson, strategist at 22V Research.
Magnificent Seven shares as a whole are down double-digit percentages from their 52-week high. Yahoo Scout.
There are various explanations for the sale of The Magnificent Seven.
High oil prices caused by Operation Epic Fury reignited stubborn inflation and forced the Federal Reserve to maintain its high interest rate stance for longer. Rates that remain high for extended periods of time are the natural enemy of growth-oriented technology valuations because they reduce the value of future earnings.
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Meanwhile, capital spending commitments to build artificial intelligence infrastructure spooked investors at the beginning of the year.
Capital expenditures of the four major tech players – Google (GOOGL, GOOG), Microsoft, Amazon (AMZN), and Meta (META) – are expected to exceed $650 billion in 2026, up 60% from 2025. Spending at these levels could put downward pressure on profit margins.
Microsoft and Meta are poised to be among the more aggressive spenders on AI this year, likely leading investors to reduce exposure to them in a more uncertain economic environment.
And finally, institutional investors have shifted from digital growth plays to war games perceived as safe havens in energy, defense and domestic manufacturing.
“All of the previous ‘significant’ lows over the last decade in which the S&P 500 breached the 200-day moving average did not reach final lows until less than 25% of the constituents broke above the 200-day moving average,” cautioned BTIG technical strategist Jonathan Krinsky. “This reached ~43% on Friday, so there is still a long way to go.”
Brian Sozzi He is the Editor-in-Chief of Yahoo Finance and a member of Yahoo Finance’s editorial leadership team. Follow Sozzi on X @BrianSozzi, instagramAnd LinkedIn. Tips on stories? Email brian.sozzi@yahoofinance.com.
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