Magnificent 7 Stocks Erase $2.3 Trillion on Rotation

Magnificent 7 stocks have lost more than $2.3 trillion in market value this year as investors took profits and moved capital into memory-chip shares while DRAM and NAND prices rose and hyperscalers boosted data-center spending.

The Roundhill Magnificent 7 ETF (MAGS) fell to $60.80 from a year-to-date high of $71.17. From their peaks this year, Nvidia was down about 20%, Microsoft about 33%, Meta Platforms about 30%, Amazon about 14% and Tesla about 16%. Apple fell from a year-to-date high of $317 to roughly $280. Earlier in the year Apple had risen more than 150% from its 2023 lows and Nvidia had risen about 43% from last year’s lows.

Investors rotated into memory-focused stocks after DRAM and NAND prices climbed to record or multi-year highs amid a supply shortage. Memory suppliers including Micron, SanDisk, Western Digital and Seagate have been among the top performers. Since its April launch the Roundhill Memory ETF (DRAM) has amassed more than $24 billion in assets.

Higher memory prices have increased component costs for large cloud and web-service operators. The largest hyperscalers are planning capital expenditures exceeding $750 billion this year for data centers and related infrastructure, driven by new data-center builds and higher component spending.

Several major technology companies have raised capital or taken on new debt to fund infrastructure spending. Google raised more than $80 billion through a mix of debt and equity. Nvidia issued over $25 billion of debt. Meta Platforms has explored similar financing, and Tesla said it may not generate positive cash flow this year because of costs tied to its Terafab project. Some analysts have questioned the near-term returns from those large capital outlays.

Valuations for several members of the group have eased from their peaks. Nvidia trades at a forward price-to-earnings ratio near 22, slightly below the S&P 500’s forward multiple of about 23. Meta’s forward P/E has fallen to about 16 and Google’s is near 23. Apple said it would raise MacBook prices and is considering higher iPhone prices to offset rising component costs.

The term “Magnificent 7” refers to Nvidia, Microsoft, Apple, Meta, Amazon, Tesla and Google. The group’s decline this year occurred alongside the shift of investor money into memory suppliers and increased scrutiny of large tech companies’ capital spending plans.