Magnificent 7 slump as investors rotate to chip stocks and SpaceX
In brief
- Microsoft down 33%, Meta down 28%, joining Tesla, Amazon, Nvidia and Alphabet in double-digit declines.
- Bitcoin slumped roughly 50% from October all-time high amid broader market rotation.
- Sandisk surged 800% this year; Micron Technology up 230% as capital flows to AI infrastructure.
- Magnificent 7 combined capex expected to hit $725 billion in 2025, a 77% increase from 2024.
- Crypto exchange volumes fell to $4.41 trillion in May, lowest level since September 2024.
The infrastructure play
Capital isn't giving up on artificial intelligence. It's shifting focus. Memory-chip maker Sandisk has surged roughly 800% this year, while Micron Technology has gained about 230%. The Global X Artificial Intelligence & Technology ETF, which focuses on memory-related companies, is up about 140%. The VanEck Semiconductor ETF is up 67%. These aren't flashy software plays—they're the foundational layer. The companies building the chips, memory, and data centers that any AI system needs to run.
"The story today is not just about concerns over AI spending. It is also about capital rotation," according to market analysis. Tesla, Amazon, Nvidia and Alphabet are all trading more than 10% below recent highs. The rotation is broad and deliberate.
The capex crunch
The scale of AI spending is staggering. Google parent Alphabet, Amazon, Microsoft and Meta are expected to spend a combined $725 billion on capital expenditures this year—a 77% increase from last year's record level. To fund this arms race, Alphabet, Amazon and Meta collectively borrowed some $93 billion last year, accounting for roughly 6% of total corporate bond issuance.
The numbers are real. So are the doubts. Investors are questioning the enormous cost of the AI arms race. Share repurchases have fallen 33% to $132 billion in 2025, a sign that even tech management is redirecting cash away from shareholder returns and toward infrastructure.
Crypto and space diverge
Crypto is getting caught in the undertow. In May, combined exchange volumes fell 3.45% to $4.41 trillion, the lowest since September 2024. Meanwhile, space-tech opportunities are attracting fresh capital. SpaceX raised $75 billion in the largest IPO in history, signaling that investors see infrastructure plays—whether semiconductors, memory, or launch capability—as the real growth engine.
"The Magnificent 7's AI-driven growth story is facing a reality check." — CoinDesk
The story is straightforward: investors bought the AI narrative. Now they're buying the bill of materials. Hardware beats hype when the capex becomes visible.
Frequently asked questions
Why are chip stocks outperforming the Magnificent 7?
Investors are rotating from AI software companies to semiconductor and memory makers—the infrastructure layer underlying all AI systems. Sandisk is up 800% and Micron 230% this year as capital flows to companies providing the foundational hardware.
How much are the Magnificent 7 spending on AI infrastructure?
Alphabet, Amazon, Microsoft and Meta are expected to spend a combined $725 billion on capex in 2025, a 77% increase from last year. This massive spending is raising investor concerns about return on investment.
Is crypto part of this market rotation?
Yes. Bitcoin has slumped about 50% from its October all-time high, and combined crypto exchange volumes fell to $4.41 trillion in May, the lowest level since September 2024, as capital flows elsewhere.
