The Magnificent Seven group of megacap tech stocks has shed more than $2.3tn of value this month, in a violent rotation away from companies spending hundreds of billions of dollars on AI infrastructure and towards the chipmakers benefiting from their largesse.
The group — Nvidia, Meta, Apple, Microsoft, Alphabet, Amazon and Tesla — has dropped 10 per cent in June, leaving it on course for its worst month in more than a year, and is down 3 per cent for the first half of this year.
Investors are increasingly questioning whether the enormous spending commitments by the big so-called hyperscalers, in particular Meta, Amazon, Microsoft and Alphabet, will translate into sufficient profits to justify their huge share price gains of recent years. In addition, their margins face a squeeze from the rising costs of components such as memory chips and electrical equipment.