Market Performance Overview
The Magnificent 7 technology stocks demonstrated modest resilience in January 2026, rising 1.3% despite facing headwinds from investor rotation away from mega-cap technology shares. While slightly underperforming the S&P 500’s 1.4% gain, the group outpaced the NASDAQ, which remained flat during the period. This performance occurred as investors shifted capital towards small-cap, value, and cyclical sectors, driven by profit-taking activities and concerns about elevated technology valuations.
Strong Earnings Drive Growth Momentum
The Magnificent 7 companies (excluding NVIDIA) delivered impressive fourth-quarter 2025 results that broadly exceeded market expectations. The group achieved their highest revenue growth in four years, posting a robust 15% year-over-year increase, whilst earnings growth accelerated to 23% year-over-year. This strong performance was underpinned by sustained cloud momentum, enhanced advertising efficiency, and resilient hardware demand across the technology sector.
Individual Stock Performance Highlights
Tesla emerged as the standout performer, surging 10.9% after delivering earnings that beat analyst estimates. The company’s management demonstrated strong commitment to autonomous vehicles and robotics, announcing plans for over US$20 billion in capital expenditure to construct new facilities for Optimus robot production and Cybercab/Robotaxi manufacturing in fiscal year 2026.
Meta followed closely with a 10.6% gain, benefitting from robust AI-driven fourth-quarter 2025 results that showcased the company’s successful monetisation of artificial intelligence across its Family of Apps platform. This performance reflected growing investor confidence in Meta’s AI capabilities.
Conversely, Microsoft faced significant pressure, declining 9.1% as the largest laggard. The company’s higher-than-expected capital expenditure of US$37.5 billion, representing a 66% year-over-year increase compared to the anticipated US$34.3 billion, raised concerns about near-term profitability. Apple also struggled, falling 4.9% due to rising memory costs creating margin headwinds and the lack of visible results from its Gemini partnership.
Investment Outlook
Phillip Securities Research maintains an overweight recommendation on the Magnificent 7 stocks. The research firm believes earnings growth will continue to outperform both the S&P 500 and NASDAQ 100, excluding Tesla. Key growth drivers include increasing AI demand from sovereign nations, the US government’s AI Action Plan, and anticipated rate cuts in 2026.
Frequently Asked Questions
Q: What was the overall performance of Magnificent 7 stocks in January 2026?
A: The Magnificent 7 stocks rose 1.3% in January 2026, slightly underperforming the S&P 500 (1.4%) but outperforming the NASDAQ (flat).
Q: Which factors drove the strong fourth-quarter 2025 earnings performance?
A: The strong performance was driven by robust cloud momentum, strong advertising efficiency, and resilient hardware demand, resulting in 15% year-over-year revenue growth and 23% year-over-year earnings growth.
Q: Which Magnificent 7 stocks were the top performers in January 2026?
A: Tesla was the biggest gainer at 10.9% following earnings beats and autonomous vehicle commitments, whilst Meta gained 10.6% due to successful AI monetisation across its platforms.
Q: What caused Microsoft’s significant decline during the period?
A: Microsoft fell 9.1% due to higher-than-expected capital expenditure of $37.5 billion (versus $34.3 billion expected), representing a 66% year-over-year increase and raising concerns about near-term profitability.
Q: What is Phillip Securities Research’s recommendation for the Magnificent 7 stocks?
A: Phillip Securities Research maintains an overweight recommendation on the Magnificent 7 stocks, expecting continued earnings outperformance versus broader market indices.
Q: What are the key growth drivers supporting the investment outlook?
A: Key tailwinds include greater AI demand from sovereign nations, the US government’s AI Action Plan unveiled in July 2025, and anticipated rate cuts expected in 2026.
Q: What major capital investment plans did Tesla announce?
A: Tesla announced plans for over $20 billion in capital expenditure to build new factories for Optimus robot production and Cybercab/Robotaxi production in fiscal year 2026.
This article has been auto-generated using PhillipGPT. It is based on a report by a Phillip Securities Research analyst.
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