U.S. stock futures rise after U.S.-Japan trade deal; Tesla, Alphabet earnings due
Investing.com -- The Magnificent 7 stocks—Tesla, Amazon (NASDAQ:AMZN), Alphabet (NASDAQ:GOOGL), Meta (NASDAQ:META), Nvidia (NASDAQ:NVDA), Microsoft (NASDAQ:MSFT), and Apple—declined 16% in Q1 2025, marking a sharp reversal from their leadership role in the 2024 market rally, Deutsche Bank (ETR:DBKGn) analysts said in a note Tuesday.
Deutsche Bank wrote that the end of US “techceptionalism” was marked by this sharp drop, as the companies saw over $2.4 trillion erased in market capitalization by the end of the quarter.
The decline began after a strong rally in late 2024, fueled by deregulation calls and AI enthusiasm.
However, by mid-March, all seven companies turned negative, as investors questioned whether AI momentum had peaked.
For example, Tesla (NASDAQ:TSLA) saw its market cap retreat from a high of $1.5 trillion in December to around $0.8 trillion, mainly due to declining auto volumes, especially in Europe. By quarter-end, Tesla was the worst performer in the group, down 36%.
Similarly, Nvidia, which soared by 171% in 2024, fell 17% in a single day after concerns arose about the sustainability of its market dominance. Other major declines included Alphabet (-18%), Amazon (-14%), Microsoft (-11%), and Apple (NASDAQ:AAPL) (-15%), with the latter suffering partially due to a potential probe by Beijing.
Deutsche Bank’s analysis points to the global shift in tech leadership: China’s tech sector outperformed (+20.8%), while US tech underperformed (-7.7%).
With US tech facing high valuations, macroeconomic concerns, and geopolitical tensions, the analysts expect the sector to stabilize rather than continue declining in the short term.
“Tesla, Amazon, Alphabet, and Meta all rose rapidly and then fell to around its pre-rise levels, suggesting the market may now be stabilizing,” wrote the bank.
Despite the challenges, Deutsche Bank suggests that the Mag 7 remains highly innovative and profitable.
However, they state the longer-term outlook could be impacted by increased global competition, especially in AI, as markets in China and Europe ramp up their efforts.