What ‘Magnificent 7’ stocks need to show to revive the trade

After a brutal first quarter, the verdict is out on whether to dip one’s toes into the “Magnificent Seven” carnage.

“Probably what’s been happening is they feel heavy — in there’s so much gains in them and not a lot of new buyers who don’t understand the story and had already participated,” Truist co-chief investment officer Keith Lerner told Yahoo Finance. “Also a big concern right now is that tech is overspending.”

Those concerns led to an uncharacteristic start to 2025 for the once market-leading cohort.

The Bloomberg Magnificent Seven Index plunged 16% in the first quarter, erasing some $2.4 trillion in market cap. By comparison, the S&P 500 (^GSPC) lost 8.5% in the quarter, while the Dow Jones Industrial (^DJI) shed 6%.

Tesla (TSLA) was the worst-performing Magnificent Seven stock in the quarter, down 36%. Nvidia (NVDA) tanked 17%. Alphabet (GOOG) lost 18%. Amazon (AMZN) declined 14%. Microsoft (MSFT) clocked in with an 11% fall. Apple (AAPL) lost 9%.

Read more about today’s Magnificent Seven stock moves and market action.

Only Meta (META) managed to outperform the S&P 500 for much of the first quarter. But after jumping 26% between January and February, its stock finished the quarter down 6%.

There are company-specific factors at play for the Magnificent Seven sell-off too.

Tesla CEO Elon Musk has been under fire for his work with the Trump administration. Sales have fallen off a cliff globally, prompting Wall Street to get more cautious about the company’s 2025 financial prospects.

Nvidia failed to impress the super bulls at its closely watched annual GTC event in March. Analyst profit estimates for the first quarter and the year have stayed relatively unchanged since the event, according to Yahoo Finance data.

Trump tariff fears have weighed on Apple shares, as the company manufacturers the bulk of its products in China.

When Microsoft and Amazon reported fourth quarter earnings in February, each served investors slowing cloud growth stories. Profit margins also came in light versus some analyst estimates.

To reawaken the Magnificent Seven trade, Truist’s Lerner says the market will need to see a few things happen.

“I think it can be just some time passing where earnings continue to rise, which they are today, while prices consolidate, and investors realize they [the stocks] are cheap again on a relative basis to growth prospects,” Lerner explained.

And if AI demand is slowing, investors hearing spending cutbacks would help alleviate margin worries.