The seven major U.S. stock market giants have all entered a technical correction zone. Microsoft (MSFT.US) has already fallen more than 18% so far this year.

Against the backdrop of heightened geopolitical tensions and a decline in market risk appetite, the U.S. “Magnificent Seven” stocks collectively entered a technical correction zone. On Friday, the Technology Seven index that tracks these companies closed down more than 10% from the all-time high it set last October, reaching the level of “correction” that the market typically defines.

Data shows that the index fell 1.6% on Friday, after dropping 1.9% on Thursday. Over the past few weeks, the index had repeatedly broken below the correction line intraday, but it was not until this Friday that it first confirmed a technical correction at the close.

This move signals that the core forces that have driven U.S. stocks higher in recent years are beginning to cool noticeably. Fueled by the AI investment boom, these tech giants were once viewed as the earliest beneficiaries and became the main drivers of the S&P 500 bull market. Data shows the Magnificent Seven index rose 107% in 2023, 67% in 2024, and 25% in 2025. However, since 2026 began, the share prices of all seven companies have fallen.

“The Magnificent Seven” refers to Alphabet(GOOGL.US, GOOG.US); Nvidia(NVDA.US); Meta Platforms(META.US); Apple(AAPL.US); Amazon(AMZN.US); Tesla(TSLA.US); and Microsoft(MSFT.US). This year, investing in all seven of these companies has produced negative returns across the board.

Market participants noted that investors are starting to question the outlook for returns on AI-related investments. Kim Forrest, Chief Investment Officer at Bokeh Capital Partners, said that many investors are re-evaluating the large-scale AI spending by technology companies in the AI space. “Investors are starting to question companies putting AI funding in at such a high pace, but there is no clear path to profits in the short term—more like defending against potential competitors,” she said. “And momentum investors typically prefer to invest in assets that keep rising.”

As investors begin to demand to see the actual returns of AI investments, the appeal of large tech firms has declined. At the same time, the market is also worried that new AI tools could have disruptive effects on industries such as software. Among the Magnificent Seven, Microsoft has performed the weakest this year, with its stock price down cumulatively by more than 18%.

Although the pullback in share prices has lowered these companies’ valuations, overall valuations still remain above the broader market average. Against the backdrop of escalating geopolitical risk and increased market volatility, some investors are cutting back their allocation to high-risk assets and instead increasing positions in sectors viewed as safe havens, such as energy and utilities. In addition, the war between the U.S. and Iran and the surge in oil prices have also put pressure on the overall U.S. stock market.

However, some investors believe that large tech stocks themselves still have a certain “safe-haven attribute.” They point out that these companies have strong earnings growth, sound balance sheets, and lower exposure to commodity-price risk; therefore, the current stock-price correction may actually present a buying opportunity.

Robert Edwards, Chief Investment Officer at Edwards Asset Management, said that the earnings yield of large tech companies is, to some extent, similar to U.S. Treasury yields, making them attractive to investors seeking stable returns. “From a valuation perspective, large tech stocks still have reasonable prices and real growth potential. AI is not just hype—these companies are likely to generate cash flow from AI investments within a reasonable timeframe, even though capital expenditure levels are indeed very high.”