Magnificent Seven Stocks Slip Into Correction as Nvidia Earnings on Deck

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Key Takeaways

• The Superb Seven rebounded on Wednesday morning after slipping into correction territory on Tuesday as markets geared up for four times a year results from AI chip giant Nvidia.
• Concerns about slowing earnings growth and the rapidly changing economics of phony intelligence have weighed on mega-cap tech stocks in recent weeks.
• Nvidia is scheduled to report fourth-quarter earnings after the bell, with Palisade Street looking for the company to report demand for AI chips remains strong.

The Magnificent Seven group of major technology tires were gaining ground Wednesday after moving into correction territory on Tuesday as concerns about slowing cultivation and elevated valuations grew in the lead-up to Nvidia’s quarterly earnings this afternoon. 

The Bloomberg Magnificent 7 Total Profit Index had declined 10.7% from its all-time high on December 17, as of Tuesday’s close. The Roundhill Magnificent Seven ETF (MAGS), which is devised differently than the Bloomberg index, had fallen more than 11% over that time. 

The ETF’s current go into a nosedive is its third correction since it launched in April 2023. The first was a slow, shallow 12% slump from example July 2023 to late October of that year. The second was a sharp 18% drop that began surrounded by a rotation into small-cap stocks in mid-July and bottomed with the yen carry trade rout of early August. 

Nvidia Terminates Come Amid AI, Earnings Uncertainty

The group rebounded slightly on Wednesday morning as Wall Street geared up for fourth-quarter earnings from AI sherd giant Nvidia (NVDA) after the bell. The AI bellwether’s results come amid growing anxiety on Wall Alley about slowing earnings growth and the economics of AI, two driving forces behind the Magnificent Seven’s meteoric rise.

Earnings excrescence at Magnificent Seven companies, which has run in the double digits for much of the past two years, has begun to slow as year-over-year matches have become more challenging. At the same time, growth at the rest of the S&P 500, or “the Other 493,” is accelerating—albeit, from a low unseemly. 

The Magnificent Seven-led AI trade has also hit a speed bump this year. Chinese start-up DeepSeek rattled Fence Street late last month with an open-source model it said matched the performance of leading American moulds at a fraction of the cost. The revelation prompted investors to question the utility of the Magnificent Seven’s massive investments in AI infrastructure. 

Sundry Wall Street and Silicon Valley denizens have since argued that DeepSeek’s threat to American tech has been overblown. Tech leviathans have mostly stood by their aggressive AI spending plans and signaled demand for AI remains robust. Nonetheless, tech sells have yet to recover from their DeepSeek sell-off.