SAN FRANCISCO — A turbulent week unfolded for technology stocks, with major players in the sector experiencing significant fluctuations as debates around artificial intelligence (AI) spending heated up. Notably, two members of the so-called Magnificent Seven—Microsoft and Amazon—fell into bear market territory, marking a steep decline from their recent highs.
All seven stocks in this elite group have recorded losses year-to-date, with NVIDIA showing a 2.23% drop on Friday alone. Amid widespread selloffs, Oracle’s shares climbed sharply, possibly signaling a shift in the negative sentiment surrounding the stock.
Microsoft saw its shares fall 27% from recent peaks, despite exceeding earnings expectations. Following its earnings report, investors reacted strongly, resulting in the company enduring its most significant one-day decline since the onset of the COVID-19 pandemic. Analysts point to two main factors weighing on Microsoft’s stock. First, there’s a general concern that AI advancements could erode pricing power for software companies. To counter this, Microsoft is investing heavily in its AI offerings and core products, such as Microsoft Office. However, a simultaneous slowdown in Azure’s sales growth is also raising eyebrows; Microsoft projected a 38% growth rate for the next quarter, but analysts were hoping for figures above 40%. This dual pressure puts the company in a challenging position, although many believe it will weather the storm in the long run.
Amazon’s fortunes have also taken a hit, with a 23% decline from recent highs, largely due to disappointing cloud growth projections. The tech giant has earmarked $200 billion for capital expenditures this year, a significant investment, but it lacked the optimistic guidance investors were looking for regarding accelerating growth in its Amazon Web Services (AWS) division. Such cautious outlooks have historically impacted Amazon’s stock, prompting concerns that the company might not deliver the anticipated momentum in the latter half of the year, although long-term prospects remain favorable.
Apple’s stock has faced a downturn as well, driven by fears that rising memory prices could hurt margins, further fueling caution about cloud demand across the tech sector. Interestingly, despite speculation about spending on cloud infrastructure, NVIDIA has experienced its own decline, reflecting a market filled with apprehensions even amidst otherwise promising developments.
In contrast, Oracle emerged positively this week, gaining 12% after announcing plans to raise substantial funds for AI cloud initiatives. Despite sitting 18% below its 2025 peak, Oracle’s performance stands out as a symbol of shifting market sentiment. Companies within the neoclouding space also saw gains, hinting at a bright future fueled by increased infrastructure spending from large players that may benefit smaller firms.
Meanwhile, NVIDIA’s stock remained relatively stable, dropping only 1.4% during a week marked by volatility. Though projections for the company’s earnings have been rising—expected to increase from $6.81 to $7.74 per share over the last three months—its shares are still down approximately 12% from where they traded in early November. This discrepancy between expectations and stock performance could signal that analysts might be undervaluing NVIDIA’s potential for the upcoming fiscal year. Investors are closely watching to see if the company can exceed earnings projections during its upcoming report on February 25.
As the technology sector grapples with various pressures, the next few weeks could be pivotal in redefining the landscape as companies adjust strategy and investors assess opportunities amid uncertainty.