One silver lining of the great tariff selloff of 2025? Previously overvalued tech stocks are starting to look pretty cheap.
Rabid AI hype propelled a group of select Big Tech stocks into the stratosphere over the past two years, high enough to give these companies their own super cool nickname: The Magnificent 7. This small but mighty handful of stocks accounted for about a third of the S&P 500’s gains in 2024.
But this year, the AI trade has begun to dwindle. Investors have moved to defensive corners of the market, and a Chinese startup left Silicon Valley floored when it proved it could build a high-quality AI model just like the Magnificent 7 without blowing billions of dollars on super-advanced semiconductors.
And that was all before stocks fell hard after Trump’s tariffs sent everyone into a panic. Now, the biggest stocks on the market are looking like some of the biggest busts: These seven stocks have lost a combined $2.7 trillion in market value over the last three weeks alone. Here’s how they’re doing in 2025:
- Nvidia, the biggest name in the AI game, has sunk 12.03% this year
- Alphabet is down 12.64%
- Apple has fallen 12.45%
- Amazon has tumbled 10.11%
- Microsoft is down 7.17%
- Only Meta Platforms has risen this year, up a measly 1.40%
- But Tesla has suffered the biggest selloff, plummeting 34.09% year to date
Can AI still pay off?
While Nvidia has recovered 10.78% over the last five days, the chipmaker is only trading at about 23 times earnings per share forecasts over the next 12 months—far lower than its five-year average of 40 times, according to Barron’s.
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That means Nvidia is now cheaper than Starbucks, Walmart, Netflix, and Chipotle, among others, based on their forward price/earnings ratios.
But Nvidia isn’t the only AI darling that’s in the bargain bin. Morningstar analysts think that four of the Mag 7 members are now undervalued: Meta, Amazon, Microsoft, and Alphabet.
Of course, whether we’re just at the beginning of the AI revolution or China will eat Silicon Valley’s lunch depends on who you ask.
“We believe this is Year 3 of what will be an 8-10 year build out of the AI Revolution. Will there be some near-term headwinds from Trump Policy...yes...but this in no way changes the $2 trillion of AI Cap Ex on the horizon,” explained Wedbush analyst and noted tech bull Dan Ives. “We also believe valuation-wise many of these tech stocks are not expensive (Nvidia, Microsoft, etc) and not fully reflecting the sheer growth opportunities happening over the coming years.”—LB