Most Magnificent 7 Tech Stocks Underperform S&P 500 in 2025 as AI Spending Doubts Grow
Most of the Bloomberg “Magnificent 7” tech stocks failed to beat the S&P 500 in 2025 for the first time since 2022. The Magnificent 7 index rose 25% in 2025 versus the S&P 500’s 16%, but gains were concentrated in Alphabet and Nvidia. Early 2026 shows the trend continuing: the Magnificent 7 is up 0.5% year-to-date while the S&P 500 is up 1.8%. Wall Street expects slower profit growth for Big Tech — roughly 18% in 2026, the weakest since 2022 — narrowing the edge over the rest of the S&P 500. Valuations have come down (Magnificent 7 at ~29x projected profits vs S&P 500 at ~22x), but investor scrutiny is rising as companies ramp AI-related capital spending. Notable company notes: Nvidia remains the strongest analyst favorite (76 of 82 analysts recommend buy) with a ~39% average 12-month upside; Microsoft and Apple face differing AI exposure and growth profiles; Amazon, weakest in 2025, started 2026 stronger amid AWS concerns; Meta’s stock fell after larger-than-expected AI capex guidance; Tesla swung from poor 2025 performance to late-year gains but trades near 200x earnings. Big-picture implications include an expected $7 trillion data-center capex need by 2030, rising US electricity demand, and growing skepticism that AI spending will deliver commensurate returns. Key keywords: Magnificent 7, S&P 500, AI spending, profit growth, Nvidia, Alphabet, data centers, valuations.
Neutral
The news is neutral for crypto markets. It describes equity-market dynamics among large US tech stocks — slower profit growth, concentrated returns in a few names, and rising AI capital expenditure — which do not directly move cryptocurrency fundamentals but influence macro sentiment and risk appetite. Historically, tech-led equity strength (especially in AI and chips) has supported crypto risk-on flows, while equity weakness or rotation into broad-market stocks can reduce speculative demand. Short-term: traders may see volatility in risk assets as investors reassess tech valuations and AI capex, possibly causing correlated pullbacks in crypto during risk-off episodes. Long-term: if AI investment sustains broader economic growth and liquidity, it could indirectly support crypto adoption and institutional allocations; conversely, if AI spending disappoints and equities reprice lower, reduced risk appetite and tighter liquidity could weigh on crypto. Overall, the report signals sector rotation and caution rather than a clear bullish or bearish catalyst for crypto, so categorize as neutral.