Magnificent Seven Tech Stocks Hit 10-Year Valuation Lows Amid Heavy AI Spending

According to MarketWatch columnist Robert Ross, the Magnificent Seven tech stocks—including Microsoft, Amazon, Google, Meta, Oracle, Apple, and Tesla—have become a drag on the broader market amid heavy spending on AI infrastructure. Valuation premiums for these former market leaders have fallen to 10-year lows as investors worry about short-term cash flow dilution, despite record profit growth.

However, this does not signal the end of the bull market. AI monetization is already accelerating, with Amazon Web Services achieving its strongest growth in four years and Microsoft's AI business generating $37 billion in annualized revenue. The market is simply repricing these stocks based on near-term spending pressures rather than longer-term profit potential, similar to how Amazon once sacrificed cash flow to build AWS, which became a core profit engine.