Microsoft Rebounds While Apple and Alphabet Fall This Week

Magnificent 7 stocks were under pressure this week amidst a broader market sell-off. The Dow Jones fell 2.95% while the Nasdaq 100 fell 1.24%. Microsoft (MSFT) saw the strongest gains this week as investors rotated back into software stocks. On the other side of returns, Alphabet and Apple saw the steepest declines.
Apple’s declines came in spite of a series of major product announcements. Apple’s release of the $599 MacBook Neo has driven positive retail sentiment, but Wall Street continues to worry about margin pressure from increasing memory prices.
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It was a week that reminded investors how quickly the Magnificent 7 can splinter. AI optimism and fresh earnings momentum gave way to macro headwinds, geopolitical jitters, and stock-specific news pulling the cohort in opposite directions.

The S&P 500 fell 1.98% for the week, and the Nasdaq 100 dropped 1.24%. The Magnificent 7 mirrored that split: Microsoft surged while Apple fell, and Alphabet dropped 4.25% with the rest scattered in between.

The VIX fear gauge spiked 27.5% week-over-week, reaching 23.75 by Thursday, pushing into elevated uncertainty territory. Investors were navigating an Iran conflict mid-week, continued AI capital expenditure scrutiny, and a Friday S&P 500 rebalancing that added more AI stocks into the widely followed index.

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Ticker	Company	Feb 27 Close	Mar 6 Close	Weekly Return
MSFT	Microsoft	$392.74	$408.96	+4.13%
AMZN	Amazon	$210.00	$213.21	+1.53%
NVDA	NVIDIA	$177.19	$177.82	+0.36%
META	Meta	$648.18	$644.86	-0.51%
TSLA	Tesla	$402.51	$396.73	-1.44%
AAPL	Apple	$264.18	$257.46	-2.54%
GOOGL	Alphabet	$311.76	$298.52	-4.25%

Mid-week geopolitical tensions tied to the Iran conflict rattled markets. The headline is oil prices have surged. That’s raised the fear gauge and led to a broad sell-off of stocks. Friday’s close was especially ‘fear-driven’ as investors fled stocks seen as more risky. AI darlings like Lumentum and Bloom Energy saw steep declines in the last 30 minutes of trading before the weekend.

Yet, after the market closed, Lumentum (and the broader AI industry) received a strong stamp of approval.

On Friday night, the S&P 500 completed a quarterly rebalancing that added several AI infrastructure names including Vertiv, Lumentum, Coherent, and EchoStar, effective March 23, reflecting how deeply AI infrastructure has penetrated the broader index. As we noted in our preview of the rebalancing, Lumentum and Coherent were seen as ‘long shots’ to join, while Vertiv was the favorite.

Microsoft was the clear standout this week. A Seeking Alpha analysis framed Microsoft’s heavy AI capital expenditure as profit-driving rather than margin-destroying, a narrative that directly contrasts with how the market has treated the stock since its latest earnings.

Product news added fuel. Microsoft announced new Cloud PC devices with ASUS and Dell, launching by Q3 2026, devices that boot directly into Windows 365 Cloud environments. Meanwhile, Morningstar identified Microsoft as a top pick expected to thrive regardless of AI disruption, a notable exception after the firm downgraded six other software companies including Adobe and Salesforce.

Reddit sentiment on MSFT leaned bullish, with a high-engagement post about Trump’s mid-week AI energy strategy meeting with Microsoft, Amazon, Google, Meta, and OpenAI generating over 1,000 upvotes on wallstreetbets.

The bottom line is that investors broadly rotated back into software-adjacent stocks that could be (relative) beneficiaries if tariff fears begin weighing on the market again. Amongst Dow stocks, Microsoft was a winner alongside IBM and Salesforce.

Alphabet had a rough week on multiple fronts. The stock slipped below the $300 critical support level as a weaker-than-expected U.S. labor report hit megacap tech broadly. But Alphabet’s drop was sharper than peers for reasons beyond macro.

The core concern is capital allocation. Alphabet’s 2026 CapEx guidance of $175-185 billion is drawing scrutiny over near-term free cash flow pressure, even as the company wins meaningful enterprise AI business. Positive Google Cloud announcements included a partnership with CVS for an AI-powered health platform called Health100 using Gemini models, plus a Waystar partnership preventing $15 billion in denied healthcare claims. Good news, but not enough to offset the macro and structural concerns weighing on the stock.

Legal and regulatory headwinds also emerged. Multiple articles on the company this week zeroed in on a wrongful-death lawsuit involving the Gemini chatbot, a Play Store commission settlement, and Waymo facing NTSB regulatory review. Prediction markets reflect the caution: markets priced only a 39.5% probability of Alphabet closing above $300 by March 9. Analysts remain constructive with a consensus price target of $366.57 and a Moderate Buy rating from 51 brokerages, but the near-term picture looks challenged.

Apple unveiled seven new products including the MacBook Neo at $599, the iPhone 17e at $599, iPad Air M4, MacBook Pro M5, and a new Studio Display. The MacBook Neo generated buzz as the first Mac with an A-series chip, with one analysis calling it “the most consequential product in a decade.”. Apple TV also launched an exclusive Formula 1 deal that scored a bullish sentiment reading among analysts covering the services segment.

Yet the stock fell 2.54%. The disconnect comes down to valuation and sector pressure. UBS and Jefferies both maintained Neutral ratings, arguing current pricing already reflects near-term growth, while broader tech selling dragged the stock lower. MacBook price increases tied to a memory chip shortage also raised supply cost concerns that partially offset the product launch enthusiasm. Reddit sentiment remained bullish, centered on a thread titled “The $599 iPhone 17e made me rethink AAPL’s near term outlook”, suggesting retail investors view the product strategy positively even as the stock drifted lower.

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