Buy-and-hold investors who thought that the Magnificent Seven stocks would offer stability need to exercise caution.
Stock markets are rewarding companies that spend heavily on artificial intelligence hardware while cutting staff. Markets equate business growth to buying computer hardware. They assume that quarterly expenses fall with a lower payroll. However, AI chips have ongoing costs, while letting go of experienced staff risks the loss of institutional knowledge.
According to Reuters, Meta Platforms (META) will start its companywide layoffs on May 20. Around 8,000, or 10% of Meta’s global staff, will kick off the job cut cycle. It will cut more jobs in the second half of 2026.
META stock bottomed in the low $500s in late March to close at $688.55.
Tesla (TSLA) will suffer from falling EV sales in the U.S. market. Although Canada introduced a tax credit to increase affordability, the U.S. market is bigger. CEO Elon Musk hyped self-driving software, robots (“Optimus”), AI chips, and the cyber cab as growth catalysts. However, Tesla does not have final products on the market in those segments.
Microsoft (MSFT) bottomed at around $360, closing at $422.79 on April 17. CoPilot, powered by OpenAI, faces severe competition from Anthropic. Any advancements in Anthropic and Alphabet’s (GOOG) Gemini would hurt CoPilot AI subscription sales. Microsoft needs that sales growth to offset its heavy capital expenditures this year.
