Magnificent Seven Drop $797 Billion on AI Spending Concerns

The Magnificent Seven erased roughly $797 billion in market value in a single session as the group fell 4.8% after earnings from Alphabet and Tesla. Tesla shares plunged about 15% and Alphabet slid 7.1%. The broader market moved lower, with the S&P 500 down 1.2% and the Nasdaq 100 off about 1.9%.

Alphabet reported second-quarter capital spending of $45 billion and said it expects capital expenditure as much as $205 billion for the year. That Q2 outlay pushed the company’s cash flow into negative territory for the first time since it became a public company.

Tesla warned that 2026 will be a year of heavy investment. Chief executive Elon Musk told investors the company should “accelerate capital spending while avoiding wasteful investment,” highlighting the focus on ramping up production capacity and related infrastructure.

Other major technology companies also moved lower. Amazon fell about 4.6%, Meta Platforms dropped 3.4% and Microsoft lost 2.2%. Apple recorded the smallest decline in the group and has risen about 11% this month and 18% year to date.

The Magnificent Seven index sits roughly 11% below its late-May peak, wiping out about $2 trillion in market value from that high.

Rising oil prices and renewed conflict involving Iran coincided with the stock declines and added to investor concerns about inflation and global growth prospects.

The sharp session prompted hedge funds and other institutional investors to reassess positions tied to large-scale AI infrastructure spending, including data centers, semiconductors and cloud capacity. Market participants are watching upcoming earnings for more detail: Amazon, Meta and Microsoft are scheduled to report next week.

Analysts and investors will use those results for further information on capital plans and operating performance as companies explain the scale and timing of investments needed to support artificial intelligence projects.