The ‘Magnificent Seven’ Sees Unprecedented $1 Trillion Wipeout Led By Apple
In a shocking turn of events, technology stocks suffered significant declines last Thursday, with the famed “Magnificent Seven” collectively witnessing a historic drop of $1 trillion in market capitalization. According to Dow Jones Market Data, this was the largest single-day loss ever recorded for this elite group of tech giants, surpassing the previous record of $758.7 billion, set only weeks before on March 10.
Apple: The Biggest Loser
Leading the charge in this unprecedented downturn was Apple Inc. (AAPL), which saw a staggering market-cap reduction of $311 billion. The company’s stock fell by 9.3%, raising alarms among investors regarding the implications of newly imposed tariffs announced by former President Donald Trump. Apple’s reliance on overseas production—particularly in China—means that its products could soon face significant tariffs, complicating demand and putting considerable strain on its supply chain.
Jefferies analyst Edison Lee shared his insights in a note to clients, saying, “The simple thought is likely that Apple’s products will be subject to this tariff, and thus demand will get hit and thus the supply chain will suffer.” This adds another layer of uncertainty for Apple investors, who are now left wondering if the company will receive an exemption from these tariffs, similar to one it obtained during Trump’s first term. Notably, Apple recently unveiled a plan to invest $500 billion into the U.S., a move that could potentially increase its chances of securing such an exemption.
Amazon and Meta: Also Feeling the Heat
Apple wasn’t alone in suffering losses. Amazon (AMZN) also faced a substantial decline, with shares dropping 9%. Colin Sebastian from Baird highlighted that Amazon could be one of the most affected companies due to potential tariffs, which would extend their impact across multiple areas, including advertising expenditures, spending on enterprise technology, and higher infrastructure costs.
Meta Platforms Inc. (META), the parent company of Facebook, saw its stock slide by 9% as well. Sebastian noted that both Meta and Alphabet Inc. (GOOG) are vulnerable to reductions in advertising spending coupled with rising infrastructure costs. However, because Alphabet has a diverse revenue stream that includes a substantial cloud computing business, they fared better, with their stock down only 4% on the same day.
Nvidia and Tesla: A Mixed Bag of Results
Nvidia Corp. (NVDA) saw its stock drop by 7.8%, despite the fact that semiconductors were initially exempt from tariffs. Wolfe Research analyst Chris Caso explained that the real impact lies in tariffs on finished goods that contain semiconductors—many of which are sourced from countries facing high reciprocal tariffs. This has left investors grappling with concerns over supply chain dynamics.
Tesla Inc. (TSLA) faced a drop of 5.5%, but analysts at Deutsche Bank suggest that the situation is more complex for the automotive titan. The consumer market may face a barrage of tariffs, which could create hurdles far beyond just automotive tariffs. Nonetheless, analysts noted that “Tesla and Ford (F) appear to be relatively better positioned” compared to others in the industry.
Microsoft: The Least Affected
Interestingly, Microsoft Corp. (MSFT) was the least impacted member of the Magnificent Seven, with shares declining only 2.4%. This steadiness may be attributed to the company’s stronger focus on software and cloud services, which are less directly affected by tariffs than hardware products. However, analyst Kirk Materne from Evercore ISI cautioned that “it’s almost impossible to think that the uncertainty related to tariffs won’t have a negative impact on near-term spending plans.”
Conclusion: Uncertain Times Ahead
The historic drop in value among the Magnificent Seven serves as a stark reminder of the volatile dynamics influencing the technology sector. As investors scrutinize potential future tariffs and their broader implications on demand and supply chains, the overall sentiment remains cautious. With factors such as overseas production, advertising spending, and evolving supply chain challenges at play, it remains to be seen how these tech giants will navigate these turbulent waters moving forward.