(Yahoo! Finance) - Even the specter of decades of AI dominance can't spark the "Magnificent Seven" right now.
Every Magnificent Seven stock is down double-digit percentages from its 52-week high, according to data from Yahoo Scout (see chart below).
Microsoft (MSFT) is down more than 30% from its highs after a quarter that showed slowing sales growth rates and big promises of aggressive capital expenditures.
"I'm just not sure that right now is the time to jump in [on the Mag 7] — I think there's a little bit more downside risk to them," Slatestone wealth chief market strategist Kenny Polcari said on Yahoo Finance's Opening Bid (video above).
There are several explanations for the Mag 7 sell-off.
Higher oil prices, driven by Operation Epic Fury, have reignited stubborn inflation, forcing the Federal Reserve to maintain a higher-for-longer interest rate stance. Rates at higher levels for a long period are a natural enemy of growth-oriented tech valuations, as they discount the value of future earnings.
Meantime, capex commitments to build out AI infrastructure have spooked investors at the start of the year.
Capital expenditures for the four major tech players — Google (GOOGL, GOOG), Microsoft, Amazon (AMZN), and Meta (META) — are expected to exceed $650 billion in 2026, a 60% surge from 2025. Spending at these levels could put downward pressure on profit margins.
And lastly, institutional investors have rotated out of digital growth plays to perceived safe-haven war plays in energy, defense, and domestic manufacturing.
"At some point, they're [Mag 7] going to become a value play," Polcari said. "And so certainly that will raise the interest. But I never owned them. I'm not going to jump in on them now. I just think there's other places for me to put my money."
By Brian Sozzi - Executive Editor
