$1.57 trillion wiped off value of the Magnificent Seven so far this year while Meta becomes the Lone Ranger

An astonishing $1.57 trillion has been wiped off the value of the Magnificent Seven year-to-date. Six of the seven stocks have fallen in value, with Meta the only one to produce a positive return. Meta has become the Lone Ranger, representing a significant turning point for the tech collective.

Other labels slapped on popular stocks including ‘Faangs’ and ‘Mamaa’ were quickly confined to the history books – is the Magnificent Seven now joining them?

Source: AJ Bell, LSEG. Data to 7 March 2025

Source: AJ Bell, ShareScope. 2025 data 1 January to 7 March

Why did Mag7 shares thrive between 2023 and 2024?

Excitement around AI was a key driver for this group of shares over the past few years, either as enablers or beneficiaries. Microsoft, Alphabet and Amazon were all about growth in cloud computing and Meta was driven by successful use of AI to improve user engagement on its social media platforms.

On a bigger level, AI drove a resurgence in investor appetite for all things tech-related and that has also contributed to the Magnificent Seven’s ascent. Apple shares moved up as it continued to shift more electronic goods while Tesla motored higher as Elon Musk became best buddies with Donald Trump, with investors hoping that would open more doors for the electric vehicle business.

Why have Mag7 stocks gone into reverse?

Tech stocks rallied when Donald Trump won the 2024 US presidential election on hopes of less stringent regulation. The euphoria around his return to the White House has now fizzled away, with all the S&P 500’s gains wiped out. That’s dampened investor sentiment in general.

The dollar, as benchmarked by the trade-weighted DXY index, is down 5.4% from January’s peak, to erase the gains forged after the presidential poll.

Investors are beginning to realise that Trump’s policies might have negative consequences, even for people in the US where the prospect of recession is now being talked up. A trade war is unsettling and there are far-reaching consequences if it blows up.

We’ve seen a rotation into other areas such as cheap(er) stocks in the UK and Europe, and more defensive areas in the US like healthcare are getting their moment in the sun. Even China is attracting more attention as investors keep their fingers crossed for more government stimulus measures to prop up the economy.

Investors have been sitting uncomfortably when it comes to the US and that’s made them look closer at their portfolios to consider if changes are needed. It’s natural to look at the areas that have previously done well and consider if it is time to lock in gains.

The hype cycle

When something is hyped up, a rising tide will lift all boats, and that’s exactly what we saw with anything related to AI in 2023 and 2024. The tide is now going out and investors are paying more attention to what might go wrong and whether recent capital expenditure by tech companies has been worth it.

The easy money has now been made on AI stocks so investors are looking more closely – and not everything is rosy. There are concerns companies have spent too much cash, too fast. Cheaper options for AI, such as China’s DeepSeek, brings the economics of the technology to the forefront of the debate.

AI still has the potential to be ground-breaking for companies around the world – what’s central to share prices now is the pace of the revolution and a potential slowdown looks plausible.

Concerns are growing that big tech firms such as Microsoft are dampening rollout plans for new data centres, a sign that the AI boom might take longer to play out than previously expected. The big tech players are also developing their own chips, which spells trouble for Nvidia’s demand going forwards.

With such a growing list of concerns, it’s understandable why investors might be less willing to pay a high multiple of earnings for a stock. Nvidia currently trades on 24 times earnings, which is a fraction of the 84 peak earnings multiple in mid-2023 when the world got swept up in all things AI-related. Every single member of the Magnificent Seven has de-rated from its 2024 peak price-to-earnings multiple.

Source: AJ Bell, LSEG. Latest data taken 6/3/25. PE = price to earnings ratio. Alphabet 2023 peak 28/7/23, 2024 peak 15/5/24.Amazon 2023 peak 7/8/23, 2024 peak 9/2/24. Apple 2023 peak 19/7/23, 2024 26/12/24.Meta 2023 peak 19/7/23, 2024 peak 2/2/24. Microsoft 2023 peak 18/7/23, 2024 peak 5/7/24. Nvidia 2023 peak 14/6/23, 2024 peak 19/06/24. Tesla 2023 peak 17/7/23, 2024 peak 17/12/24

Where is the marginal buyer?

Fundamentally, the Magnificent Seven group of companies continue to produce large earnings, yet you need to consider if excitement around things like AI is already reflected in the share price. Everyone knows about the AI opportunity and it is certainly priced into the likes of Nvidia given its massive share price gains in 2023 and 2024.

It’s now a question of who is left that doesn’t already own the stock to play the AI trend. If there is no marginal buyer (someone who is willing to pay top dollar), demand weakens for the shares and that explains why momentum has faded.

Elsewhere, Tesla has been battling an electric vehicle market that isn’t growing as fast as expected, and competition is intense. EU and UK sales for Tesla fell by almost half in January and investors have been turned off by the company’s boss moving into political circles. Elon Musk’s position as Donald Trump’s sidekick doesn’t sit well with certain investors.

Apple seems to be going through the motions and is fixated with constant upgrades to its core products rather than being a trendsetter in the world of consumer electronics. The company is playing it safe and not pushing boundaries with technological innovation. Investors need something new to rekindle excitement in Apple’s shares, otherwise the stock could drift sideways.

Why is Meta the only Mag7 share to rise year-to-date?

Two tailwinds have driven Meta’s share price. The first is proof that investment in AI is having a positive impact on its earnings. Second is the prospect of its biggest rival in the US, TikTok, potentially being removed from the market.

Investors have been concerned that companies have spent too much money to support AI. Meta has certainly spent its fair share of dollars – billions of them – yet payback is clear to see in its results. AI has enabled Meta to serve up more relevant content to its social media users on Facebook and Instagram. The more content consumed, the more advertising these people see – and that’s a financial win for Meta.

Meta says its AI is already being used by over 700 million consumers and it is now bringing the same technology to businesses. Companies are using its social media platforms to target customers and AI can help to deepen relationships.

Is it time to say goodbye to the Magnificent Seven name?

History shows that these labels come and go. We had the ‘Faangs’ for a while – Facebook (now Meta), Apple, Amazon, Netflix and Google (now Alphabet). Variations on that name and constituents included ‘Mamaa’ which swapped Netflix for Microsoft. That turned into ‘Fangman’ which was a precursor to the Magnificent Seven, with the same members.

Even though people have happily lumped the Magnificent Seven group of companies together, there are distinct differences between what they do, and they don’t always move in unison on the stock market.

While these businesses aren’t at risk of disappearing, their collective name is going out of fashion. It will no doubt be replaced by something else soon – whether that’s a new variation or, perhaps more likely, a new group of companies catching the market’s eye.