Magnificent 7 Tech Stocks Drop Amid Concerns Over AI Spending
The so-called 'Magnificent Seven' tech stocks experienced a significant decline this week, with their index falling by nearly $800 billion in market value on Thursday alone. The drop was attributed to investor concerns over the massive capital expenditures being made by hyperscalers like Alphabet and Tesla for AI infrastructure amid global economic uncertainty due to renewed hostilities in Iran. Alphabet announced a capex increase of up to $200 billion this year, largely driven by investments in AI data centers. Similarly, Tesla reported below-estimate profits while planning significant spending on AI capabilities, robotics, and autonomous vehicles. Analysts noted that the market reaction suggests growing skepticism about whether these large expenditures will translate into strong returns. Tesla saw a particularly steep decline of over 19% in five days, with Alphabet down nearly 8.5%, Amazon by more than 6%, Meta around 6%, Microsoft and Apple also falling slightly.
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Topics: AI spending fears earnings reports Magnificent Seven stock market decline