The Magnificent Seven's Shaky Ground
President Trump's second inauguration brought a sense of celebration to Silicon Valley's elite. The "Magnificent Seven" - Alphabet, Amazon, Apple, Microsoft, Meta Platforms, Nvidia, and Tesla - were prominently seated, enticed by the promise of deregulation and fresh merger opportunities.
recession concerns fueled by Trump's aggressive trade policies, government job cuts, and underwhelming economic data revealing weaker-than-expected US job growth.
The tech-heavy Nasdaq Composite experienced its biggest single-day drop since the pandemic-induced "Black Monday" of March 2020, plummeting by 4%. The "Trump put" - the belief that the White House would intervene to prevent steep market losses - seems to be fading, leaving the sector on shaky ground.
The fallout has been particularly harsh for some billionaire founders. Elon Musk, Jeff Bezos, and Sergey Brin have collectively lost over $170 billion in personal wealth since the year's start. Mark Zuckerberg, however, stands as an exception, gaining over $4 billion during the same period.
Fresh trade conflicts, including new tariffs on Canadian imports, have further dampened sentiment. This move is seen as a sign of Trump doubling down on his combative approach rather than seeking de-escalation. Markets had hoped for a less disruptive approach, but concerns are mounting that the "Trump put" may not exist in this term, or at least not yet.
Adding to the turbulence is the concern that the Magnificent Seven have become overvalued due to the widespread enthusiasm for artificial intelligence. Nvidia's forward price-to-earnings ratio, for instance, surged to 32 times early this year before dropping to 23 following the sell-off. A broader retreat in optimism about AI, exacerbated by negative news from DeepSeek, has further intensified the pressure.
Tesla has been hit the hardest, losing $652 billion in market value as slowing demand in China and Europe coincides with a backlash against Musk's close ties to the White House. Investors are now hoping for a reversal of Trump's more aggressive policies, potentially leading to a "relief rally" in US equities. Until then, the fortunes of the Magnificent Seven and their billionaire founders remain uncertain and volatile.