Magnificent 7 Stocks Remain Resilient Amid AI Financing Concerns February 3, 2026
Market Performance Overview
The Magnificent 7 technology stocks demonstrated resilience in December 2025, recovering with a 0.2% gain following a challenging November that saw a 1.9% decline. While the group of stocks slightly underperformed the S&P 500’s 0.3% return, it managed to outpace the NASDAQ, which fell 0.1% during the month. This performance occurred amid ongoing investor rotation from technology stocks into financials and industrials, driven by profit-taking activities and concerns over high valuations in the technology sector.
Mixed Individual Performance Amid Sector Challenges
December 2025 revealed divergent performance within the Magnificent 7 group. NVIDIA emerged as the standout performer with a 5.4% gain, bolstered by the US government’s decision to allow sales of its H200 chips to China. However, major AI infrastructure companies faced headwinds, with Google declining 2.1%, Microsoft falling 1.7%, and Amazon dropping 1.0%. These declines reflected broader market concerns about financing challenges for AI infrastructure projects, particularly following Blue Owl Capital’s exit from a $10 billion deal intended to fund Oracle’s data centre project.
Investment Outlook and Supporting Factors
Phillip Securities Research maintains an OVERWEIGHT recommendation on the Magnificent 7 stocks, citing several supportive factors for continued outperformance. The Federal Reserve’s 25 basis point interest rate cut in December provided crucial support for higher equity valuations, particularly benefiting growth-driven technology stocks. The research firm believes that all Magnificent 7 companies except Tesla will continue to deliver earnings growth that outpaces both the S&P 500 and NASDAQ 100 indices.
Future Growth Catalysts
Several tailwinds are expected to drive continued growth for the Magnificent 7. Increasing demand for artificial intelligence solutions from sovereign nations presents significant expansion opportunities. Additionally, the US government’s AI Action Plan, unveiled in July 2025, provides policy support for the sector’s development. Further monetary policy accommodation is anticipated, with more rate cuts expected in 2026, which should continue supporting valuations for growth-oriented technology stocks.
Frequently Asked Questions
Q: How did the Magnificent 7 perform in December 2025?
A: The Magnificent 7 recovered with a 0.2% gain in December 2025, following a 1.9% decline in November. This performance slightly underperformed the S&P 500 but outperformed the NASDAQ.
Q: Which Magnificent 7 stock performed best in December?
A: NVIDIA was the top performer with a 5.4% gain, driven by US approval for sales of its H200 chips to China.
Q: What challenges did AI infrastructure stocks face?
A: AI infrastructure stocks like Google, Microsoft, and Amazon declined due to concerns about financing challenges for AI infrastructure projects, highlighted by Blue Owl Capital’s exit from a $10 billion Oracle data centre funding deal.
Q: What is Phillip Securities Research’s recommendation on the Magnificent 7?
A: Phillip Securities Research maintains an OVERWEIGHT recommendation on the Magnificent 7 stocks.
Q: What factors support the positive outlook for these stocks?
A: Supporting factors include the Federal Reserve’s 25 basis point rate cut, expected continued earnings outperformance versus major indices, greater AI demand from sovereign nations, the US government’s AI Action Plan, and anticipated additional rate cuts in 2026.
Q: Why are investors rotating out of technology stocks?
A: Investors are rotating funds from technology into financials and industrials due to profit-taking and concerns about high valuations in technology stocks.
Q: Which Magnificent 7 company is expected to underperform in earnings growth?
A: Tesla is the only Magnificent 7 company that is not expected to outperform the S&P 500 and NASDAQ 100 in earnings growth according to the research.
This article has been auto-generated using PhillipGPT. It is based on a report by a Phillip Securities Research analyst.
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