The Magnificent Seven stocks lose $800 billion

Key Takeaways

• The Magnificent Seven stocks experienced a sharp decline on Monday, with their combined market value falling by nearly $3 trillion over the past month.
  
• Nvidia shares dropped over 6% on Monday following reports that its upcoming Blackwell system might be delayed by several months.
  
• Meanwhile, other major tech companies such as Microsoft, Alphabet, and Amazon have also faced significant losses recently, as Wall Street grows cautious about the rapid rise in artificial intelligence investments.

Apple (AAPL.O) and other major companies saw significant declines on Monday as fears of a U.S. recession intensified and Berkshire Hathaway (BRKa.N) reduced its stake in Apple by 50%. This move further dampened a rally that had been driven by enthusiasm for artificial intelligence. Shares of Apple, Tesla (TSLA.O), Alphabet (GOOGL.O), and Amazon (AMZN.O) each fell by more than 4%. Nvidia (NVDA.O) experienced a sharp drop of 7%, while Microsoft (MSFT.O) and Meta Platforms (META.O) each lost 3%. The downturn was exacerbated by growing concerns about both a potential U.S. recession and the substantial investments required for AI infrastructure.

Nvidia
Nvidia (NVDA) faced notable pressure on Monday due to reports suggesting that its upcoming Blackwell system, which features next-generation AI chips, might be delayed by three months or more, according to The Information. The report, citing anonymous sources close to the company, attributed the delay to design flaws.
As a result, Nvidia’s shares dropped 6.4% on Monday, falling over 25% from their recent peak. This decline has led to a reduction of approximately $845 billion in the chipmaker's market capitalization.

Microsoft
On Monday, Microsoft (MSFT) fared somewhat better than most of its Magnificent Seven peers, with a decline of 3.3%. However, the stock has recently faced headwinds due to concerns over escalating AI expenditures. Additionally, Microsoft reported cloud revenue of $36.8 billion last week, falling short of the $37.2 billion that analysts had forecasted.
Since reaching an all-time high of $467.56 on July 5, Microsoft’s shares have dropped more than 15%, resulting in a $540 billion reduction in its market capitalization.

Alphabet
Alphabet Inc. (GOOGL; GOOG) contributed to one of the most significant tech sell-offs this year by revealing a sharp increase in spending on AI infrastructure for the second quarter, with such investments expected to remain elevated through 2025. Despite this, Google's cloud revenue of $10.35 billion surpassed analysts' expectations, unlike Microsoft.
On Monday, the stock dropped 4.5%, exacerbated by a broader market decline and a federal judge's decision that Google breached U.S. antitrust laws by paying billions to make its search engine the default on smartphones. Since July 10, the company's market capitalization has fallen by over $377 billion.

Apple
Apple Inc. (AAPL) saw its stock open nearly 10% lower on Monday after Warren Buffett's Berkshire Hathaway (BRK.A, BRK.B) disclosed over the weekend that it had cut its stake in the company by nearly 50% during the second quarter. This follows a 13% reduction in Berkshire's Apple holdings in the previous quarter.
The stock later rebounded but still closed down 4.8%. Over the past three weeks, Apple's market capitalization has plummeted by more than $390 billion.

Amazon
Amazon (AMZN) saw its stock plunge nearly 9% last Friday after falling short of quarterly revenue expectations and providing weak guidance. This decline overshadowed a 19% increase in revenue from Amazon Web Services, with growth anticipated to continue as demand for its AI services rises.
On Monday, Amazon shares were further affected by the broader market sell-off, dropping 4.1%. The company's market capitalization has decreased by approximately $410 billion from its recent peak.

Meta
Meta Platforms (META) stood out as one of the few bright spots among the Magnificent Seven this earnings season. Its stock gained after it reported earnings that exceeded expectations and outlined the success of its AI investments.
"We had a strong quarter, and Meta AI is on track to become the most used AI assistant globally by the end of the year," CEO Mark Zuckerberg stated.
On Monday, Meta’s shares fell 2.5%, marking the smallest decline among the Mag Seven stocks. Despite this, its market capitalization has still dropped by $165 billion since its peak in early July.

Tesla
Tesla (TSLA) recently reported a disappointing second-quarter earnings, showing a 45% drop in profit due to rising costs associated with AI projects and a decrease in the average sale price of its vehicles.
On Monday, Tesla's shares fell 4.2%, extending its total market capitalization loss to over $200 billion since its recent peak.

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