The underperformance of Magnificent 7 stocks since their peak in February 2025 is raising concerns among investors. Big Tech stocks and particularly the Magnificent 7 stocks have been under pressure since the start of the year. The Magnificent 7 tech firms, including Apple, Alphabet, Microsoft, Meta, Amazon, Tesla, and Nvidia, have a significant market impact due to their massive valuations.
This week, at least four of the Mag 7 firms are reporting their numbers. Microsoft and Meta are reporting after the market closes on Wednesday and Amazon and Apple after the market closes on Thursday. Alphabet and Tesla reported their earnings last week.
Alphabet, the parent company of Google, announced operating income for the first quarter of $30.6 billion on Thursday, much above the $28.7 billion Wall Street had predicted. Alphabet does not issue Guidance reports, making it unclear how its business was affected by President Trump’s tariff rollout and the turbulence following their announcement.
Elon Musk’s Tesla posted its financial results for the first quarter of 2025 after market close on Tuesday, April 22, 2025 but skipped the Guidance report – “It is difficult to measure the impacts of shifting global trade policy on the automotive and energy supply chains, our cost structure and demand for durable goods and related services. We will revisit our 2025 guidance in our Q2 update.”
Elon Musk’s Tesla posted disappointing first-quarter numbers, including a 71% drop in net profits; however, once Elon Musk revealed that his work with Trump’s Department of Government Efficiency was coming to an end, the stock price rose.
“Considering we are dealing with the top market caps in the world, their price impact will move the markets. All but META are in both the Dow and S&P 500 and all four stocks are the top holdings in their specific sector ETF’s. They all recently reached individual bear market territory and have much room to reverse to get back to old highs,” says Jay Woods, Chief Global Strategist, Freedom Capital Markets.
Apple is concerned of supply chain issues amid potential Trump tariffs and has plans to shift production to India by 2026.
Investors will also be watching if Amazon, which is scheduled to report on Thursday, and Microsoft and Mark Zuckerberg’s Meta, which report on Wednesday, want to invest tens of billions of dollars in the race for artificial intelligence despite the unstable economic climate.
Big tech companies are not shying away from spending a huge amount on AI capex despite the challenge they faced from DeepSeek in January.
In addition, the new risk for these Mag 7 companies is from the potential impact of Trump tariffs. All of the Mag 7 companies could be at different levels of risk if tariff uncertainty raises the economy’s probability of a recession.
According to Zacks Research, “Looking at earnings expectations for the group as a whole, the expectation is that Mag 7 earnings will increase +19.6% in 2025 Q1 from the same period last year on +10.9% higher revenues. These expectations are a blend of actual results from Alphabet and Tesla and estimates for the remaining five, of which four are on deck to report this week.”
By Thursday, all but one of the Magnificent Seven companies would have announced their results. Nvidia will be the next big one to watch out for, with results not expected until May 28.
Jay Woods, Chief Global Strategist, Freedom Capital Markets shares his views on the Mag 7 earnings:
META shares are 26% below their 52-week highs and are currently embroiled in litigation, which has taken CEO Mark Zuckerberg away from his daily activities.
Watch to see if reduced ad spending by Chinese companies SHEIN and Temu has impacted their bottom line. Also, how are recent AI initiatives and spending contributing to growth? Lastly, how much time are daily active users spending across their platforms?
MSFT shares are 16% below their highs and flat for the last year. The company continues to spend on AI and investors want to see how this investment is being integrated into their product suite and what impact that will have on revenue. Another key focus will remain on its cloud services performance. Growth with Azure is expected to bolster its cloud operations.
AMZN shares are 22% below their 52-week highs. Like the other megacap growth stocks, AI monetization remains a priority. Investors are also focused on their e-commerce and consumer trends to get a better gauge to see if new spending habits are impacting the bottom line as expectations of tariffs grow.
AAPL shares are 19% below all-time highs and facing pressure in the Chinese markets. The company has announced plans to shift production to India. Investors are hopeful to gain insight on how progress is going in that endeavor and what impact that may have on the bottom line.
iPhone sales will also be scrutinized closely. They may have experienced a bump due to people rushing out to beat expected tariff increases that could cause severe price hikes. Lastly, what’s new in the pipeline? They usually reserve this for their semi-annual events, but a tease could come here as well.