Big tech stocks, in particular the ‘Magnificent Seven’, have dominated the stock market for over two years, but their share prices have crashed as Donald Trump’s tariffs threaten to upend the established economic order.
At the start of 2023, seven tech companies accounted for approximately a fifth of the S&P 500 between them. Two years on – having been constantly among the most-bought stocks in the world ever since – the group, dubbed the ‘Magnificent Seven’, now comprises over 30% of the S&P 500 index.
This saturation means that, in effect, all investors are exposed to these big tech stocks. Whether or not you own them directly, any stock market tracker funds, the likes of which will likely form a large part of your pension, will have significant exposure to the Magnificent Seven group.
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Stock markets are enduring a major selloff, though, thanks to Trump’s ‘Liberation Day’ tariffs. As some of the pricier offerings in the stock market, the Magnificent Seven have borne the brunt of this selloff.
“Despite months of sabre-rattling by Donald Trump, markets appear to have been unprepared for the depth and breadth of tariffs announced by the White House,” says Derren Nathan, head of equity research at Hargreaves Lansdown. “The tech-heavy Nasdaq saw the worst of it, falling nearly 6%.”
Should you be worried about the recent major sell off the Magnificent Seven have suffered over recent weeks? Is this just a flash in the pan – or is the AI boom bursting like the dotcom bubble did twenty-five years ago?
What are the Magnificent Seven stocks?
The Magnificent Seven – often abbreviated to ‘Mag7’ – comprises seven big tech stocks that the investing community perceives as being the leading exponents of technology in general and artificial intelligence (AI) in particular.
They are:
- Alphabet (NASDAQ:GOOGL) – the parent company of Google, as well as other companies such as the AI developers DeepMind and Anthropic;
- Amazon (NASDAQ:AMZN) – originally an online bookstore, now a giant of e-commerce and, via Amazon Web Services (AWS), cloud computing;
- Apple (NASDAQ:AAPL) – the tech hardware company that brought the world the MacBook and the iPhone;
- Meta (NASDAQ:META) – formerly Facebook, the company is now heavily focused on ‘Metaverse’ technology as well as AI products, like Llama model;
- Microsoft (NASDAQ:MSFT) – the computing giant behind the Windows operating system and the Azure cloud platform;
- Nvidia (NASDAQ:NVDA) – the hardware developer that pioneered GPUs, the chips that power AI data centres;
- Tesla (NASDAQ:TSLA) – the electric vehicle (EV) manufacturer that, according to CEO Elon Musk, is aiming to crack autonomous driving.
The term ‘Magnificent Seven’ was coined by Bank of America analyst Michael Hartnett in 2023. By then, the group was already starting to dominate the stock market in the wake of the AI and tech stock mania that followed the public launch of ChatGPT in late November 2022.
While each company is distinct, there are some general similarities that apply to most, if not all, of the group.
All are (or at least have been) incredibly innovative; Apple’s products have revolutionised personal computing, Meta made social media mainstream, and Tesla has demonstrated the viability of EVs.
Most are also highly diversified. Even if a specific product made a company like Meta or Amazon famous, these megacap companies now have their fingers in all sorts of technological pies – favourites being cloud computing and, of course, AI.
All the companies in the group are involved in AI, albeit in different ways and to varying degrees (Apple, for example, has drawn criticism for failing to develop its own AI products as fast as its counterparts).
Their key similarity, though, is their stock market dominance. At the time of writing, they comprise seven of the world’s eleven largest companies by market capitalisation. All except Tesla have a market cap of over $1 trillion (Tesla’s has fallen from $1.4 trillion at the end of December to $805.06 billion at the time of writing).
Latest Magnificent Seven News
The Magnificent Seven have been hammered by the stock market selloff that has followed Donald Trump’s imposition of far-reaching tariffs on US imports.
Apple – whose iPhones are mostly produced in China which is subject to 34% tariffs – fell 9.3% on 3 April. Amazon and Meta both fell 9.0%.
Stock | Share price change – 3 April 2025 |
|---|---|
Alphabet | -4.0% |
Amazon | -9.0% |
Apple | -9.3% |
Meta | -9.0% |
Microsoft | -2.4% |
Nvidia | -7.8% |
Tesla | -5.5% |
The stocks were already under fire this year following the emergence of Chinese AI start-up DeepSeek, and the tariff turmoil is presenting fresh headwinds for all seven stocks.
Alphabet
Despite management’s insistence that Google can thrive in the era of AI, analysts are increasingly concerned that its core search business could be one of the biggest losers to generative AI.
“We have focused on ‘the simple’ with Alphabet since our launch in mid-2023 — and that view is predicated on the view that Google is losing the next generation of ‘searchers’ to ChatGPT,” managing director and head of technology research at Melius Research, wrote in a note to clients on 31 March.
Amazon
Despite a major selloff thanks to the globalised nature of Amazon and its supply chains, there are some good news stories out there for the stock.
Its ‘Buy for Me’ feature began testing this week, which makes use of agentic AI software to buy products from other websites on behalf of users.
On Wednesday, Amazon also announced that it plans to launch the first 27 satellites for Project Kuiper, its space-based internet network, on 9 April.
Apple
Trump’s tariff announcements wiped $300 billion off Apple’s market capitalisation on 3 April.
According to Reuters, the tariffs placed on Chinese imports could increase the cost of an iPhone by up to 40%, implying that the iPhone 16 Pro Max could cost almost $2,300.
Meta
While tariffs were hammering goods-based stocks, you might have assumed that all was reasonably well in the metaverse.
Unfortunately for Zuckerberg and co, the tariff news coincided with news that its head of AI research, Joelle Pineau, was leaving the company.
Shares fell 9.0% on 3 April in response. The days of Meta’s record-breaking winning streak now seem far behind.
Microsoft
Amid the market turmoil, there’s a good news story for Microsoft this week: the company turns 50 years old.
Co-founders Paul Allen and Bill Gates founded the company on 4 April 1975. It’s fair to say that it’s been a mainstay of the technology industry for most of the half-century since.
Nvidia
Shares in Nvidia, which is heavily reliant on imports from Taiwan, where 32% tariffs will be levied, fell 7.8% on 3 April.
“While semiconductors are currently exempt from some tariffs, the broader market reacted negatively due to continued uncertainty, growth slowdown implications and potential retaliatory measures from affected countries,” said Lale Akoner, global market analyst at trading platform eToro.
Tesla
Tesla’s share price was already swinging wildly before tariffs were imposed, thanks to the announcement of woeful Q1 delivery numbers – its worst since 2022.
CEO Elon Musk, who is closely associated with the Trump administration thanks to his activity with the Department of Government Efficiency (DOGE), has made the company a target among Trump’s opponents.
However, rumours that Musk could step back from his work at DOGE within weeks saw Tesla’s share price recover, before the tariff fallout erased these gains.
Is now the time to buy the Magnificent Seven?
Given all the chaos, should you buy the Mag7 stocks?
The answer of course depends on your personal circumstances, investment goals, and risk appetite, but before investing in big tech stocks it is worth remembering that their oversaturation in the stock market and strained valuations mean that they are relatively risky investments, despite the fact that they are big, established and highly profitable businesses.
However, for those who still believe that their business models will thrive in the long term, the selloff could mark a buying opportunity for the Magnificent Seven stocks.
The table below shows the price of these stocks relative to their earnings over the last 12 months (trailing) and analysts’ projections for the next 12 (forward). Note that some of this data pre-dates the tariff selloff.
Stock | Trailing P/E ratio | Forward P/E ratio |
|---|---|---|
Alphabet* | 18.41 | 16.52 |
Amazon* | 31.31 | 27.32 |
Apple* | 31.01 | 26.04 |
Meta* | 21.12 | 19.93 |
Microsoft* | 29.71 | 26.70 |
Nvidia* | 32.10 | 20.82 |
Tesla* | 118.46 | 93.15 |
S&P 500 average^ | 23.15 | 21.10 |
NASDAQ 100 average^ | 29.27 | 25.25 |
Sources: *Wall Street analyst estimates via stockanalysis.com as of 4 April 2025, ^Birinyi Associates analysis via Wall Street Journal as of 28 March 2025
Anyone who had previously felt the Magnificent Seven were overvalued based on their fundamentals might look on them more favourably now – though it is worth noting that their valuations in this table account for day one of the post-tariff selloff, while those for the indices don’t.
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