Wall Street's souring view on the US stock market isn't just about the economy — it's about AI too

Tue, Mar 11, 2025, 10:44 AM 3 min read

This year's banal marketplace sell-off has been dramatic, but it besides contains astir each of the aforesaid characters that person featured successful the biggest marketplace disruptions we've seen implicit the past 2 years.

Both connected the mode up and now, the mode down.

During Monday's marketplace rout, shares of Nvidia (NVDA), Tesla (TSLA), Alphabet (GOOG, GOOGL), Amazon (AMZN), Meta (META), Apple (AAPL), and Microsoft (MSFT) each fell, with Tesla falling a whopping 15% to pb losses.

It marked the latest motion that the alleged "Magnificent Seven" tech stocks that drove the S&P 500 to back-to-back 20% gains implicit the past 2 years person present go the "lag seven," according to T. Rowe Price subject and exertion portfolio manager Tony Wang.

Whether stocks are going up oregon down these days, it seems, it's each 1 large AI trade.

And close now, it doesn't look similar a marketplace successful which investors are looking to stake large connected aboriginal AI growth, peculiarly with the wide net communicative for the S&P 500 (^GSPC) coming into question.

"The S&P 500’s guardant net estimates, a cardinal pillar of this bull market, person flatlined implicit the past month," Truist co-chief concern serviceman Keith Lerner wrote successful a enactment to clients connected March 4, explaining wherefore he'd downgraded equities to a neutral portfolio weighting.

Through this bull marketplace run, Big Tech has served arsenic a cardinal net driver, helping enactment wide nett maturation for the S&P 500 portion non-technology companies person struggled. At times, that's helped the assemblage play arsenic a formation to information to commercialized amid marketplace uncertainty.

But now, arsenic Wang notes, not lone are these companies' spending plans facing immoderate capitalist skepticism, but besides "[earnings] results are becoming much successful line."

"And if we look forward, they're apt going to beryllium not accelerating," Wang added.

The macro backdrop, with concerns astir Trump's tariff argumentation pushing some involvement rates and the dollar around, is besides a situation for these stocks.

"The lagged interaction of higher rates and a stronger dollar, arsenic good arsenic the statement astir AI capex person travel unneurotic to unit net revisions," Morgan Stanley main concern serviceman Mike Wilson wrote successful a enactment to clients connected Sunday.

"As a result, we've seen precise choppy scale show with the S&P 500."

The sectors that big each the Magnificent Seven tech stocks — Information Technology (XLK), Consumer Discretionary (XLY), and Communication Services (XLC) — were the worst-performing sectors connected Monday.