The valuations of the “Magnificent Seven” tech giants — Apple Inc, Microsoft Corp, Nvidia Corp, Alphabet Inc, Amazon.com Inc, Meta Platforms Inc, and Tesla Inc — are sinking as Wall Street grapples with mounting economic and geopolitical uncertainty.
Following a sharp selloff, the Bloomberg Magnificent Seven Index now trades at 26 times forward earnings, its lowest level since September. However, valuations remain well above the lows of 2018 and 2022, suggesting further downside could be in store. Analysts highlight that past bear markets bottomed around 19 times projected earnings.
Despite a brief Friday rally, the Nasdaq 100 ended the week down 2.5%, extending its decline to 11% from February highs. Apple, the index’s largest constituent, posted its steepest weekly loss in more than two years.
“Valuations are better than in December, but I don’t think we’ve found the bottom,” said Violeta Todorova, senior research analyst at Leverage Shares, who warns of further volatility amid lingering uncertainty.
Just weeks ago, tech stocks were rallying on optimism over Trump administration policies aimed at deregulation and economic stimulus. That narrative has unraveled, with President Trump signaling he is willing to tolerate market pain to push through sweeping economic changes, including fresh tariffs that have roiled markets.
Investors have been quick to retreat, locking in profits from Big Tech stocks that led the bull market since late 2022. While history shows that buying these giants during downturns has been rewarding, with Meta’s sharp recovery post-2022 slump a prime example, this time investors appear more cautious.
The group remains highly profitable, posting 34% earnings growth in 2024, yet 2025 projections have been trimmed to 22% growth, down from 24% earlier this year. Meanwhile, S&P 500 earnings are expected to rise 12% in 2025.
Tesla continues to stand apart, trading at 82 times forward earnings despite a 48% share price drop in the past three months. Apple, at 29 times forward earnings, and Alphabet, at a more conservative 18 times, reflect differing risk profiles within the cohort.
Technical signals show the Bloomberg Magnificent Seven Index’s relative strength index (RSI) dipped below 24 recently — a level not seen since 2019 — before rebounding slightly to 36, still well below overbought levels.
“This isn’t a fundamentals issue for Big Tech; it’s the macro backdrop,” said Todorova. “With more clarity on the Fed and the economic outlook in the months ahead, Big Tech could regain its leadership.”
For now, however, market strategists like Art Hogan at B. Riley Wealth caution that few are ready to “catch the falling knife” amid ongoing volatility and geopolitical tensions.
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