The long-term investors in the big tech US stocks are sitting on some decent profits. From Apple, Microsoft, Alphabet, Amazon, Tesla, Nvidia, to Meta—the group collectively called the Magnificent Seven—has been the investor’s favourite for quite some time now.

But, this was the case till 2024 when more than half of the S&P 500’s 23% return came from the Magnificent Seven stocks. Even today, the market capitalization of these seven companies makes up almost one-third of the value of the S&P 500.

2025 is a different story for the Magnificent Seven stocks. Taken together, they have lost between 1.5% and 35% since the year began.

On average, the Mag Seven stocks have fallen over 15% since the beginning of the year, while the S&P 500 is down around 5% and the tech-heavy Nasdaq-100 index is down by 8% this year.

Apple: -13%
Amazon: -12%
META: -1.5%
Alphabet: -18%
Microsoft: -10%
Nvidia: -18%
Tesla: -35%

(As of March 30,2025)

The big tech stocks do not seem to be the investors’ favourites. “The long-awaited rotation in equity markets finally appears to be underway as investors shift capital away from the over-concentrated, high-flying Magnificent Seven tech stocks and into a broader array of opportunities, says Nigel Green, CEO deVere Group

Since 2022, the Magnificent Seven stocks have driven the US stock market, owing to the success of OpenAI’s ChatGPT, which launched the AI surge. The question now is whether the AI-driven boom that propelled these equities in recent years is starting to wane.

The real impact was seen after DeepSeek, a Chinese startup, gained significant attention after its low-cost AI model gained popularity, raising concerns about the company’s increasing capital outlays.

But, should investors write them off completely? Yogesh Kansal, Co-founder & CBO, Appreciate says, “Despite the Magnificent 7 sinking nearly 15% year-to-date, writing them off would be perilous. Three members—Alphabet, Amazon, and Microsoft—now trade in undervalued territory, thanks to a correction that was due.

These firms excel at generating free cash flow, a metric that’s delivered twice the returns of traditional price-to-book measures between 2002-2024. Amazon sits on $50 billion in net cash, Alphabet’s Google business alone has generated $73 billion in free cash flow in 2024, and Microsoft produced $26 billion in the first half of this fiscal year. While sectoral rotation toward Financials ($2 billion inflows) and Healthcare continues, over 90% of Wall Street analysts remain bullish on Microsoft, Amazon and Nvidia, recognizing their proven ability to innovate and bounce back.”

According to Zacks Research – For 2025 Q1, the expectation is that Mag 7 earnings will increase +13.1% on +11.9% higher revenues. This would follow the group’s +31% earnings growth on +12.8% revenue growth in the preceding period.

For calendar year 2025, the expectation is that Mag 7 earnings will increase +12.6% on +9.5% higher revenues. This would follow the group’s +40.4% earnings growth on +13.9% revenue growth in 2024. In the aggregate, the Mag 7 group is expected to bring in $556.1 billion in earnings, up from the 2024 aggregate total of $493.7 billion.

The Mag 7 group’s tremendous earnings power and robust growth profile were essential to its prior market dominance. Whether it will continue in 2025 and beyond remains to be seen. Remember, if the stakes and the risk are high, the reward potential is equally high.