Google, Tesla and Mag 7 Fortunes Diverge. But Watch for These AI Winners.

(ANGELA WEISS/AFP via Getty Images)

Any dream of a Beatles reunion ended years ago. Like the Fab Four, the Magnificent Seven group of big technology stocks are all going their separate ways.

The group moved as one for years amid the artificial-intelligence boom, but the fortunes of its members have diverged recently as the hype has died down and reality has taken over.

The Mag 7 taken together still account for about half the weighting of the Nasdaq Composite . Two report earnings Wednesday—electric-vehicle maker Tesla and Google-parent Alphabet. The MAGS exchange-traded fund is within a whisker of its record high from December, and the stock market’s overall gains are once again being driven by Big Tech.

But that papers over a mixed performance within the Mag 7 this year—Tesla and Apple have dropped at least 15%, Amazon and Alphabet are up a little, while the remaining three— Nvidia, Meta Platforms, and Microsoft —have each gained more than 20%.

This trend largely follows the order in which companies stand to profit from artificial intelligence. First it’s the hardware makers. Then come the hyperscalers building huge data centers, followed eventually by software makers. Google and Amazon are big time cloud services sellers as well, but they also have large other businesses that mask the benefit from their hyperscaler bet.

Even though OpenAI just delayed its next ChatGPT release, the use of AI is still growing quickly. Oracle and China’s Alibaba are other hyperscalers that could benefit.

The winners in software may be harder to predict. Unlike semiconductors and data centers, it takes relatively little capital to get software up and running. The software AI winners will almost certainly include companies we haven’t heard of yet, and the losers could well be today’s household names.

While it looks like AI will be churning out hits for years to come, not all solo acts will top the charts.

—Brian Swint

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Stock Market Momentum Stalls With Mag 7 Earnings on Deck

U.S. stocks are trading near record highs heading into the thick of the second-quarter earnings season, but with markets historically expensive and reliant on the performance of tech companies, some investors are starting to embrace a more cautious outlook.

• The S&P 500 has gained around 19% over the past three months. It hit its tenth record high of the year on Monday as investors continue to bet that solid corporate earnings, a resilient economy, and Federal Reserve rate cuts will offset the impact of President Donald Trump’s tariffs.
• The gain has been largely powered by megacap tech stocks, according to data from Wisdom Tree. The so-called Magnificent Seven have surged 27%, compared with an 11% gain for the remaining stocks in the benchmark. The tech-heavy Nasdaq Composite hit its 12th record of the year on Monday.
• Some indicators signal caution. Around 81% of the 59 companies reporting by the close of trading on Friday have topped analysts’ earnings forecasts, according to LSEG. But profit gains have outpaced revenue, suggesting a weaker U.S. dollar has powered much of the overall earnings gain.
• Lori Calvasina, head of U.S. equity strategy at RBC Capital Markets, sees a stall in the “momentum trade,” where investors bet on recent winners continuing to outperform the broader market. It was seen as a crucial factor in the market’s spring rally.

What’s Next: Bloomberg’s U.S. Pure Momentum factor index, which has been highly correlated to the S&P 500, is starting to retreat, Calvasina said. “It’s worth noting in recent drawdowns that the momentum factor has peaked ahead of the S&P 500, anywhere from a few days to several weeks,” she said.

— Martin Baccardax

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TSMC Joins $1 Trillion Club Riding the AI Wave

Coming off another stellar earnings report, shares of Taiwan Semiconductor Manufacturing have hit a new high, stretching the chip maker’s market capitalization to over $1 trillion, as it’s riding the artificial-intelligence wave.

• Taiwan Semiconductor, or TSMC, has the most advanced chip-manufacturing processes and clients include Apple, Nvidia, and Advanced Micro Devices.
• Like many companies dependent on U.S. imports, TSMC had a rough start to the year, with the stock down 28% just after President Trump announced tariffs on imports from Taiwan. Since then, its American depositary receipts are up over 70%, and it sports a year-to-date gain of 22%.
• Near term, the trade war is the biggest risk. Though production in its Arizona factories is ramping up, TSMC is still sensitive to tariffs on the devices that use its chips, most of which are made in Taiwan, China, India, Vietnam, and Mexico.
• For now, only tech imports such as smartphones and AI servers from China are seeing a tariff charged to the U.S. importer.

What’s Next: Many investors think that TSMC still has a lot of runway ahead of it. Not only does it make Nvidia’s AI chips, but it also manufactures competing silicon for AMD, Microsoft, Amazon.com and Google. Though Intel may come to challenge its manufacturing in coming years, so long as the AI investment boom continues, TSMC figures to be right in the middle of it.

— Adam Levine and Elsa Ohlen

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Opendoor Joins Meme Stock Ranks as Short Sellers Circle

Opendoor Technologies has become the market’s newest meme stock, more than doubling in a matter of hours despite a real estate-dependent business that has been struggling. Its trajectory—jumping more than 100% intraday on Monday—echoes the frantic retail trading in GameStop four years ago.

• Its stock was flying on Monday, with more than 1.8 billion shares changing hands to reach its highest trading volume on record, according to Dow Jones Market Data. An endorsement by activist investor Eric Jackson may explain the surge. Opendoor executives weren’t available to comment.
• Opendoor focuses on the instant home buyer market, designed to speed up transactions and avoid realtor brokerage fees. But existing-home sales have dropped nearly 50% since Opendoor went public in late 2020, largely because of rising mortgage rates. It reached a peak valuation of $20.6 billion in February 2021.
• The recent stock pop has lifted its valuation back to $3.2 billion for the first time in a year. GameStop was likewise struggling when it became patient zero in the meme stock craze that started in January 2021. Its boost came from an investor named “Roaring Kitty” on a Reddit chat.
• Short sellers are lining up to bet against Opendoor’s recent surge. Data from S3 Partners, which tracks short selling across all the major U.S. indexes, suggest that bets against Opendoor have risen to around 24% of its shares outstanding.

What’s Next: Opendoor options are seeing a big uptick in call option buyers, suggesting there might be a “gamma squeeze” in motion. In a gamma squeeze, investors will often move to options markets to take advantage of a stock’s sudden change in momentum, pushing the share price higher.

— Martin Baccardax and Janet H. Cho

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Figma Sets IPO Terms in Latest Tech Stock Debut

The design software start-up Figma plans to raise $1 billion in its initial public offering, the latest in a string of tech debuts this year that have also included Circle Internet, Chime Financial, and CoreWeave. Figma’s overall target valuation could leapfrog initial terms set by the Circle and Chime IPOs.

• Figma will sell 37 million shares for $25 to $28 a share. Based on the post-IPO shares outstanding, Figma’s valuation would be up to $13.6 billion, or, based on all outstanding equity, could reach $16.5 billion. It will list at the New York Stock Exchange as “FIG.”
• That valuation is lower than the $20 billion merger offer by Adobe in 2022. That deal was abandoned in 2023. Figma has about 13 million monthly subscribers who use its software for online sales and branding. It also has invested in cryptocurrencies.
• It holds $69.5 million in a Bitcoin exchange-traded fund, according to the filing. And in May, Figma’s board approved a $30 million investment in Bitcoin, which it used to buy $30 million of the Circle-issued USDC stablecoin, the filing said. It plans to reinvest in Bitcoin in the future.
• Bitcoin stakes are becoming a popular strategy. Trump Media and Technology group, which owns President Trump’s social-media platform, bought about $2 billion in Bitcoin and related investments, making up around two-thirds of the firm’s $3 billion in liquid assets, the company said.

What’s Next: For the IPO, Figma is offering a little more than 12 million Class A shares and the rest are being offered by selling shareholders, including co-founder and CEO Dylan Field. Venture-capital firms selling shares in the offering include Index Ventures, Greylock Partners, and Sequoia Capital.

— Liz Moyer

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More Global Business Leaders Adding Quantum Computing: Survey

Four out of five global business leaders surveyed about quantum computing said that they believed they had reached the limit of optimization benefits that classical computers could provide, the latest sign that quantum computing is attracting interest worldwide as it progresses beyond a laboratory setting.

• Quantum computing got a vote of confidence in a survey of 400 business leaders across North America, Europe, and the Indo-Pacific, a key development for an industry that trades largely on sentiment, according to the poll conducted by D-Wave Quantum and Wakefield Research.
• The survey found that 53% of respondents—most of whom were familiar with quantum computing—said they were planning to add quantum computing into their workflows, while 27% were considering doing so. Most respondents expect to see a benefit from quantum investing in supply chain and logistics, followed by manufacturing.
• Researchers have sought to prove quantum supremacy, or a quantum machine’s ability to outperform classical computers, using problems heavily rooted in science. Companies like D-Wave, a developer of quantum computing systems and software, and Honeywell-owned Quantinuum have claimed success with tasks such as materials modeling and random number generation.
• Companies are maneuvering in the quantum sector. JPMorgan Chase hired Rob Otter from State Street to be its head of GT Applied Research, including quantum computing, immersive technology, machine learning, cloud computing, and blockchain, according to an internal memo. Otter previously led JPMorgan’s Onyx Technology.

What’s Next: Asia is seen as a big quantum market. QuEra polled 770 academics, scientists, and people linked to the quantum computing industry and found they expected quantum usage to increase more than 27% in Asia compared with a 16% increase in Europe and the U.S.

— Mackenzie Tatananni and Janet H. Cho

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—Newsletter edited by Liz Moyer, Rupert Steiner