The Magnificent 7 trade is struggling — Here's why
Published On Feb 10, 2025, 1:17 PM
The article discusses the recent struggles of the "Magnificent Seven" tech stocks—Meta, Amazon, Google, Apple, Nvidia, Microsoft, and Tesla. After a hot start to the year, Meta is the only one to show double-digit gains, while others have suffered losses due to concerns over high capital expenditures and disappointing earnings. Specifically, the fear of AI-related spending burdens has led to downward price reactions for several stocks, raising concerns about broader market impacts given their significant influence on the S&P 500, which these stocks now constitute a record high percentage of.
Stock Forecasts
TSLA
Negative
Given the ongoing challenges these tech giants face, especially concerning their AI spending responsibilities and lower-than-expected earnings, we can anticipate further downward pressure on their stocks, particularly from Tesla and Alphabet. The likelihood of broader implications for the tech sector increases as their performance affects the overall market indices.
META
Positive
Despite these struggles, Meta's strong performance suggests a temporarily positive sentiment surrounding its stock. However, this could be an outlier compared to the broader tech sector's issues, and investors should be cautious with their projections for sustained gains in the short term.
NVDA
Negative
Nvidia's upcoming February earnings will be pivotal in determining its future direction, especially amid concerns of a decline following significant capex connected to AI. Given the current sentiment, there's a risk of negative movement unless it exceeds market expectations.
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