"Tech stocks delivered a choppy week, with the sector's biggest names diverging sharply as AI spending debates intensified and bear market territory claimed two Magnificent Seven members. Incredibly, every single Magnificent 7 stock is now down year-to-date after NVIDIA (NASDAQ: NVDA) shares slipped 2.23% on Friday. Let's dive into the biggest storylines in technology this week. While many stocks sold off, we also saw a rebound in Oracle's shares that may mark a turning point in brutal sentiment around the stock."
"Microsoft and Amazon both entered bear markets this week, down 27% and 23% from their recent highs, respectively. Microsoft's decline comes despite beating earnings expectations. While the company delivered solid earnings, Wall Street swiftly delivered the stock its worst one-day decline since Covid. Microsoft currently has two 'anchors' on its share price. First, it's lumped in with software stocks that are selling off on fears AI will reduce their pricing power in the years to come."
"To defend against those fears, it needs to devote considerable computing resources to Copilot and its cash cow products like Office. Unfortunately, that need runs in stark contrast to Wall Street's other fear around the stock: Azure sales growth is below expectations. Microsoft guided to 38% growth next quarter, which is great. Unfortunately, the Street was expecting growth rates to climb above 40%. The reason Azure can't grow is because Microsoft is devoting resources to defending its products."
Tech mega-cap names diverged sharply amid intensifying AI spending debates and widespread selling pressure. Every Magnificent Seven stock is down year-to-date after NVIDIA slipped 2.23%. Oracle showed a rebound that may shift negative sentiment around that stock. Microsoft and Amazon entered bear market territory, down about 27% and 23% from recent highs, respectively. Microsoft reported solid earnings but faced investor concern over AI-related pricing pressure and below-expectation Azure growth despite guidance to 38% next-quarter growth. Amazon's cloud growth also disappointed and the company guided to $200 billion in capex for the year.
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