The world’s biggest technology companies have seen their stock prices tumble over the past month as wider tumult in the market hits the tech sector hard after years of steep gains driven by artificial intelligence (AI).
Since major advancements in AI exploded onto the scene a little more than two years ago, tech stocks have been on a tear, driving much of the market’s gains. However, this success has come back to bite the industry, combined with the uncertainty surrounding President Trump’s tariffs and questions about the future of AI.
“Tech has become a victim of its own success,” said Callie Cox, chief market strategist at Ritholtz Wealth Management.
“That doesn’t necessarily mean the tech sector’s story has imploded,” she continued. “It’s just that the expectations for tech have grown so high that it’s hard for the sector to keep reaching them.”
The tech firms known as the Magnificent Seven have taken a beating in recent weeks. Since the start of the year, these seven stocks have shed $1.57 trillion in market value, according to Yahoo Finance.
Shares in Meta, the parent company of Facebook and Instagram, have plunged nearly 19 percent over the past month. Amazon’s stock has tumbled almost 16 percent in the same period, while Nvidia is down about 14 percent.
Shares in Google’s parent company, Alphabet, have sunk nearly 13 percent, similar to Apple’s stock, while Microsoft is down almost 8 percent.
Tesla has suffered the biggest losses, with its stock plummeting 32 percent over the past month. However, this appears to be partly driven by CEO and founder Elon Musk’s role in the Trump administration, leading the Department of Government Efficiency (DOGE).
The recent sell-off is a major reversal for the Magnificent Seven, which have added trillions of dollars in market value since late 2022, coming to represent more than a third of the S&P 500.
“It’s been the best performing factor by a mile over the past two years and typically when the stock market turns quickly, you see those leadership sectors tend to get hit the worst,” Cox told The Hill.
The broader market has stumbled as Trump has threatened, imposed and walked back various tariffs on America’s trading partners. Last week, Trump enacted 25 percent tariffs on Canada and Mexico and 10 percent tariffs on China, building on the 10 percent import tax he imposed last month.
Trump later eased up on Canada and Mexico, announcing temporary exemptions for auto parts and goods covered by a North American trade agreement he negotiated in his first term.
Those exemptions will end April 2, the same day Trump is set to impose reciprocal tariffs on countries that have duties on U.S. goods. New 25 percent tariffs on steel and aluminum imports also took effect Wednesday.
Trump’s tariff moves have prompted other countries to respond. Canada announced a 25 percent tariff on U.S. goods earlier this month, followed by an additional 25 percent tariff on U.S. steel and aluminum unveiled Wednesday.
Ontario Premier Doug Ford also threatened to impose an electricity surcharge on three U.S. states — Michigan, New York and Minnesota — before backing off and agreeing to meet with Commerce Secretary Howard Lutnick on Thursday.
The European Union (EU) similarly announced plans to levy tariffs on $28 billion worth of U.S. goods in mid-April.
“The constant unrelenting news flow coming out of the Trump White House is unnerving to many growth investors we speak with around the world with white knuckle worries around what is around the corner,” Wedbush Securities analysts wrote in a note Wednesday.
The back-and-forth on tariffs has created confusion about the potential impact on the economy, said Steve Sosnick, chief strategist at Interactive Brokers, emphasizing that “markets hate uncertainty.”
“At best, the market has a difficult time with tariffs,” Sosnick told The Hill. “And in practice right now, it’s sort of making investors’ heads spin because they’re very much of a moving target; they’re changing almost daily.”
The administration’s early focus on tariffs and aggressively cutting government spending through DOGE has likely also caught investors off guard, dashing hopes that the president would focus more on deregulation and tax cuts, Sosnick noted.
Trump’s tariffs are especially likely to weigh on the tech industry, which has a lot of manufacturers overseas, Cox said.
For instance, Apple primarily produces its iPhones in China, which is now subject to a combined 20 percent tariff. The iPhone maker has yet to receive any exemptions, as it did in Trump’s first term.
The future of AI development has also been called into question in recent weeks, following the emergence of Chinese AI startup DeepSeek.
DeepSeek claimed its new R1 model performed on par with OpenAI’s latest models and cost just $5.6 million to train, a meager sum compared to the billions of dollars major U.S. tech firms are investing in infrastructure to develop AI.
“The worry for investors is that it’s gotten a little ahead of itself, and Big Tech is under a microscope at the moment because they’re spending so much on a scene that’s changing so quickly,” Cox said.
Google plans to spend $75 billion on capital expenditures this year amid its AI push, while Meta has said it will spend $65 billion, and Microsoft has committed $80 billion.
The Trump administration has hopped on the trend, launching its Stargate project with OpenAI, Oracle and SoftBank. The project seeks to invest $500 billion in AI infrastructure over the next four years.
“We can’t minimize the impact of DeepSeek on the markets,” Sosnick said.
“DeepSeek came out in early January, and it upended that model a little bit,” he added. “It didn’t upend it completely, but it raised doubts in investors’ minds about whether the promise of AI required the approach that we’ve been all investing in.”
Thomas Hayes, chair and managing member of Great Hill Capital, blamed interest rate hikes by the Bank of Japan for part of the tech sector’s recent turmoil.
“Now that the central bank has raised rates, that’s no longer free money,” Hayes said of the Bank of Japan. “So if you’ve got a loan and the interest rate’s going up, you want to pay off that loan, right?”
“The way they pay off the loan is they sell off the stocks that they’re all crowded in, which is big U.S. tech stocks, which were considered safe havens,” he continued. “That’s unwinding.”
He also emphasized that there’s often weakness in the market in February and March of postelection years due to policy uncertainty.
“The market doesn’t need good policy,” Hayes said. “The market needs known policy, and right now, the last few weeks, no one knows which way is up because every day is a new tweet and a new policy and a new volatility. Welcome to Trump 2.0, same as Trump 1.0.”
However, he added, “The good news is it tends to resolve up, not down.”