Every Magnificent 7 stock is now down double digits from its 52-week high, with the group’s losses accelerating as the war in Iran compounds on the already fraught AI trade.
Microsoft has been hit the hardest by the drawdown, falling roughly 32% from its October peak, on track for its worst start to a year in its history. Meta is down about 25%, and Alphabet roughly 15% from its closing high last month. Even the darling of the AI trade, Nvidia, and the high-performing Amazon are negative on the year. A Bloomberg index tracking the seven said it had entered correction territory in mid-March, closing more than 10% below its October record.
The selloff marks a sharp reversal from years of AI-fueled gains—the index rose 107% in 2023, 67% in 2024, and 25% in 2025. Multiple forces are now working against the group simultaneously. Oil prices have surged since Operation Epic Fury began Feb. 28, reigniting inflation expectations and shifting the interest-rate outlook. Markets now price in a greater chance of rate hikes by year-end than cuts, according to CME’s FedWatch tool, removing what had been a key pillar of the bull case for growth stocks.
At the same time, though, the excitement around AI infrastructure spending has waned, and now the market seems as spooked by it than enticed. Combined capital expenditures for Google, Microsoft, Amazon and Meta are expected to exceed $650 billion in 2026, an increase of about 60% from 2025. Institutional money, it seems, has rotated out of these Big Tech stocks and into energy, industrials and domestic manufacturing.
Some of the quick compression in value has drawn comparisons to the dot-com bust. Capital Economics wrote in a note on Friday that the S&P 500’s IT sector has converged with the valuations of the rest of the index, a pattern that matched the final months of the 2000s bubble.
Still, Capital Economics believes that the earnings estimates for the stocks, even as prices have fallen, should give pause to too many ominous comparisons.
While the firm warned that a prolonged conflict could ultimately push the S&P 500 down to 6,000, its baseline view is that the AI buildout won’t be derailed by the war, and that a recovery in valuations will eventually put U.S. stocks back on top later this year.
“That tech outperformance, alongside the fact that the US economy looks less exposed to the conflict than most, informs our view that US equities will continue faring better than their peers,” senior markets economist James Reilly wrote.
Several controversies have also slammed the Mag 7 in recent days. Microsoft’s Copilot AI product has been described as a disappointment by UBS. Meta just lost a landmark trial on its social media addiction. And many of these companies’ AI dreams are tied up in OpenAI, which just exited a massive deal with Disney to try to secure its place in Hollywood.
