Mag7 emerge remarkably unshaken after rocky week for tech stocks

Key topics.Tech giants rebound after DeepSeek's AI disruption.Meta, Apple rise, boosting the S&P 500.AI chip stocks slump, Nvidia loses big..Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here..The seventh BizNews Conference, BNC#7, is to be held in Hermanus from March 11 to 13, 2025. The 2025 BizNews Conference is designed to provide an excellent opportunity for members of the BizNews community to interact directly with the keynote speakers, old (and new) friends from previous BNC events – and to interact with members of the BizNews team. Register for BNC#7 here..If you prefer WhatsApp for updates, sign up to the BizNews channel here..By Jeran Wittenstein and Ryan Vlastelica___STEADY_PAYWALL___.After a week for the biggest US technology companies that began with a body blow from a Chinese AI upstart and included a batch of pivotal earnings, the biggest surprise may be how well they made it through..Four of the biggest tech firms managed to mostly deliver on the promises implied by their gigantic market values, while at the same time assuaging anxieties brought by DeepSeek, whose impressively advanced, low-cost chatbot caught investors off guard and rattled markets this week..Shares of Apple Inc. and Meta Platforms Inc. all ended the week higher, helping to push the S&P 500 Index to the cusp of another record despite a walloping for Nvidia Corp. and other AI infrastructure stocks. As a group, the so-called Magnificent Seven companies, which also include Microsoft Corp., Amazon.com Inc., Alphabet Inc. and Tesla Inc., ended the week largely unscathed and still in the good graces of shareholders.."Investors were probably pretty optimistic coming into the week, they got shaken up during the week, and then you had a few big voices coming in and saying everything is OK," said Michael Bailey, director of research at Fulton Breakefield Broenniman LLC. "They're not waving the white flag. These are supposed to be the smartest guys in the room and they're not panicking.".The Magnificent Seven has been responsible for the bulk of the S&P 500's gains over the past two years. With profit growth slowing and valuations stretched, investors have been increasingly looking to the other 493 companies for outperformance. But so far this season, earnings from both groups have been generally positive.."I've been really pleased with how strong earnings have been, and so has the market. For the most part things are higher," Adam Sarhan, chief executive officer at 50 Park Investments, said in an interview. "Fundamentals remain intact.".Read more: 🔒 The Economist: Big tech is bringing nuclear power back to life.With Alphabet and Amazon on tap next week, profit growth for the Big Tech cohort in the fourth quarter is now expected to come in at 26%, up from 22% at the start of the week, according to data compiled by Bloomberg Intelligence. While that's down from the 51% increase seen in last year's first quarter and would mark a fourth straight quarter of slowing growth, it's still well above the 10% increase anticipated for the S&P 500 Index..Even more than this week's actual results, it was comments on earnings calls that seemed to do most to win over investors in need of reassurance in light of DeepSeek's disruptive threat. .Meta Chief Executive Officer Mark Zuckerberg expressed confidence in his company's AI strategy and brushed aside concerns about overspending on AI infrastructure. The performance overshadowed a disappointing revenue forecast and lifted the stock, which closed 6.4% higher for the week. Its streak of 10 straight days of gains is the longest in almost a decade. .Meta CEO Mark Zuckerberg predicted a big year for AI on this week's earnings call, helping propel the shares..It wasn't all good news. Microsoft slipped 6.5% this week after growth in its cloud-computing division fell short of expectations as the company struggles to build out enough computing capacity to meet demand for its AI products. .And while executives at Meta and Microsoft both said they remain committed to massive outlays in the year ahead for their artificial intelligence plans, many AI infrastructure stocks ended the week in the red. Nvidia slumped 16%, wiping out more than half a trillion dollars in market value. Other chipmakers including Broadcom Inc. and Micron Technology Inc. also fell. .Sarhan at 50 Park Investments said he sold some AI infrastructure stocks this week because of the uncertainty, even as some questions around DeepSeek's technology and claims emerged. .Read more: 🔒 Rethinking the CAPE ratio after freakish Big Tech earnings: Nir Kaissar."It's all speculation right now, but if major companies stop needing every high-end chip they can get their hands on, I don't know that you'll be able to estimate a bottom for AI chip names," he said..To Dave Mazza, chief executive officer at Roundhill Investments, DeepSeek's emergence coupled with slowing earnings growth has put more pressure on the tech giants to show returns on AI investments in the months ahead. That's especially so given their lofty valuations..A Bloomberg index tracking the Magnificent Seven stocks is priced at 31 times profits projected over the next 12 months, which is up from about 20 at the end of 2022 and well above the S&P 500 at 22 times.."It is fair to ask how much more multiples can increase, and harder to say you should keep allocating to names when multiples have increased so much without earnings accelerating," Mazza said. For now, though, he acknowledged, "we are in a time of animal spirits and maybe euphoria, so maybe multiples can keep rising in the short term.".Read also:.🔒 Investing after stocks fall: Rate cuts, Big Tech and US election uncertaintyNasdaq 100 drops 8%: Big Tech earnings and Fed decision crucial🔒 The Economist: Schumpeter – Is artificial intelligence making big tech too big?.© 2025 Bloomberg L.P.

Mag7 emerge remarkably unshaken after rocky week for tech stocks

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