Stock-market crash: the meltdown of the Magnificent 7
Generally, a stock-market crash is a drop of 20%+ from a recent peak. Similarly, a correction is a fall of 10%+, but under 20%. Currently, the S&P 500 index is nearing a correction, but the Nasdaq Composite is close to a crash.
US stocks tank
Bad news for global investors: US stocks just had their worst quarter since autumn 2022. In Q1 of 2025, the S&P 500 dipped 4.6%, while the Nasdaq Composite index — dominated by ‘Big Tech’ stocks — dived by 10.4%.
Furthermore, from its record of 6,147.43 on 19 February, the S&P 500 has lost 8.3%. However, the tech index has fared worse, plunging 13.5% from its high of 20,204.58 on 16 December 2024.
From magnificent to malingering
One reason for the big fall in the US tech index is the outsized influence the ‘Magnificent Seven’ shares have on the US market. Here are these Goliaths, showing price falls from their record highs (table sorted by market value, largest to smallest):
| Magnificent Seven stock | Current share price | Record high | Decline | Market value |
| Apple | $224.21 | $260.09 | -13.8% | $3.37trn |
| Microsoft Corp | $381.64 | $468.35 | -18.5% | $2.83trn |
| NVIDIA Corp | $109.17 | $153.13 | -28.7% | $2.66trn |
| Amazon.com | $191.98 | $242.52 | -20.8% | $2.04trn |
| Alphabet | $158.51 | $208.70 | -24.0% | $1.92trn |
| Meta Platforms | $585.26 | $740.89 | -21.0% | $1.48trn |
| Tesla | $266.12 | $488.54 | -45.5% | $822.5bn |
These seven mega-tech stocks have lost between 13.8% and 45.5% since their individual highs. Worst hit is NVIDIA Corp, whose near-30% drop has erased $1.07trn of investors’ wealth.
In percentage terms, the worst of the Magnificent Seven is Elon Musk’s Tesla, whose stock has almost halved from its pre-Christmas peak. This is something I predicted would happen, given this share’s astonishing rise after Donald Trump’s re-election on 5 November. Even so, Tesla shares are up 9.5% since closing on 4 November — but what a roller-coaster ride they’ve ridden.
Also, the combined loss of value from these seven stocks since their respective highs totals $4.48trn — more than the entire UK stock market is worth. Whoa.
Silicon heaven?
For the record, my wife and I own four of these Mag 7 stocks, namely Apple, Alphabet (owner of Google), Amazon.com, and Microsoft Corp. We bought into these tech Titans during the lows of early November 2022, just before all four surged in value.
Reviewing the Magnificent Seven today, one stock in particular seems to me to offer compelling value. (Of course, it remains to be seen whether other investors agree with me.) This ‘Silicon value’ share is Alphabet, a near-$2trn giant whose shares trade on below 20.5 times trailing earnings.
Notably, Alphabet’s modest dividend yield of 0.5% a year is covered 9.6 times by earnings. This leaves tons of spare cash to invest in the latest technology, including artificial intelligence.
For me, Alphabet stock offers the most attractive Mag 7 risk-reward ratio for value-seeking investors like me. However, there is one huge fly in the ointment: the legal ruling that Google enjoys an illegal monopoly in online search and advertising. The big question is whether this will lead to huge fines — or even a break-up of Alphabet — in Trump’s pro-business presidential term.
As for me and my wife, we intend to hold on tightly to our Alphabet stock. Indeed, we may even buy more in the forthcoming 2025/26 tax year!
The post Stock-market crash: the meltdown of the Magnificent 7 appeared first on The Motley Fool UK.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. The Motley Fool UK has recommended Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla. Cliff D’Arcy has an economic interest in Alphabet, Amazon, Apple, and Microsoft shares. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services, such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool, we believe that considering a diverse range of insights makes us better investors.
