\n<\/p>\n
The “Magnificent Seven” stock beatdown has been particularly painful for Microsoft (MSFT) and Meta (META).<\/p>\n
Microsoft is down about 35% from its October all-time highs, while Meta is down roughly 34% from its August all-time highs. Incredibly, both stocks are now at or near their April 2025 lows during the Trump tariff chaos, even though the S&P 500 (^GSPC) is still 32% above that level.<\/p>\n
“As opposed to the April 2025 selloff, where the entire market sharply declined and then saw a spike higher once the tariffs were rolled back, this selloff feels very stock specific,” 22V Research strategist Jeff Jacobson said.<\/p>\n
Every Magnificent Seven stock is down double-digit percentages from its 52-week high, according to data from Yahoo Scout.<\/p>\n
There are several explanations for the Magnificent Seven sell-off.<\/p>\n
Higher oil prices, driven by Operation Epic Fury, have reignited stubborn inflation, forcing the Federal Reserve to maintain a higher-for-longer interest rate stance. Rates at higher levels for a long period are a natural enemy of growth-oriented tech valuations, as they discount the value of future earnings.<\/p>\n
Read more: <\/em>How to protect your money as Mideast turmoil fuels market volatility<\/em><\/p>\n Meanwhile, capital expenditure commitments to build out AI infrastructure have spooked investors at the start of the year.<\/p>\n Capital expenditures for the four major tech players \u2014 Google (GOOGL, GOOG), Microsoft, Amazon (AMZN), and Meta (META) \u2014 are expected to exceed $650 billion in 2026, a 60% surge from 2025. Spending at these levels could put downward pressure on profit margins.<\/p>\n Microsoft and Meta are poised to be two of the more aggressive AI spenders this year, likely leading investors to reduce exposure to them amid a more uncertain economic backdrop.<\/p>\n And lastly, institutional investors have rotated out of digital growth plays to perceived safe-haven war plays in energy, defense, and domestic manufacturing.<\/p>\n “All of the prior \u2018meaningful\u2019 bottoms over the last decade that saw S&P 500 breach the 200-day moving average didn\u2019t hit their final bottom until less than 25% of components were above their 200-day moving average,” BTIG technical strategist Jonathan Krinsky warned. “This hit ~43% on Friday, so still a long way to go.”<\/p>\n<\/p><\/div>\n