Good morning, investors. With Big Tech earnings kicking off today, starting with Tesla and Alphabet, we’re turning our attention to how the Magnificent 7 trade has diverged over the last year — especially since Liberation Day.

Breaking news: Late Tuesday, President Trump announced the “largest trade deal in history” with Japan, and said the country would invest $550 billion into the US. Japanese Prime Minister Shigeru Ishiba said auto tariffs on Tokyo would be lowered to 15%.

Magnificent single stocks

Big Tech isn’t one single trade anymore. It’s seven. 

The Magnificent 7 has fractured from a unified investment theme into a basket of haves and have-nots, split between AI winners like Nvidia and Meta and consumer-facing giants like Apple and Tesla that have quietly slid into correction territory. 

The story becomes obvious when you unpack how these stocks have fared over the last 12, 7, and 4 months.

The data point to diverging plays splintered by sector, strategy and sentiment.  

Over the last year, Nvidia and Meta have returned 39% and 46%, respectively. Apple and Google — once considered “safe” bets for any index-heavy investor — have been flat. 

When you zoom in to year-to-date returns, the divergence becomes more clear. 

Nvidia, Meta and Microsoft have each added roughly 20%, while the other four names are either flat or down double-digits. 

This year, Apple and Tesla have seen sharp drawdowns that have been largely hidden beneath the strength of the Nasdaq Composite and its recent string of record highs.

Unlike years past, the broad market index no longer reflects the story of the mega-cap names driving it.  

If we take out the first quarter and track performance from the week of President Trump’s Liberation Day announcement, the story shifts again and more dramatically. 

• Nvidia is up more than 50% in less than four months

• Microsoft, Tesla, Meta, Alphabet and Amazon are all hovering at a 20% gain since the start of April

Only Apple remains negative in the period. 

Taking all three snapshots into consideration, it’s clear investors no longer buy into the Magnificent Seven as one story.

Each individual name is now subject to scrutiny for its balance sheets, growth narrative, and exposure to both AI and macro shocks. 

• Nvidia and Microsoft offer upside on AI infrastructure

• Apple faces potential tariff exposure and softening iPhone sales

• Elon Musk’s political ventures and weaker EV sales have weighed on Tesla stock

Passive exposure to the group still outperforms the S&P 500, but because of several laggards the returns are no longer as outsized.

Roundhill’s Magnificent Seven ETF (MAGS) is up 23% over the last 12 months, and up about 10% against the benchmark index. 

Wall Street still sees the Magnificent Seven stocks holding enormous influence on S&P 500 earnings growth. Analysts expect the group to report year-over-year earnings growth of 14.1% for the second quarter, according to FactSet. 

Without that boost, the rest of the S&P 500 would only see earnings growth of 3.4%. 

Market snapshot

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Elsewhere

📊 Tesla reports earnings today. Wall Street expects earnings per share of 39 cents on sales of $22.1 billion, per FactSet — both lower than a year ago. However, results could be bolstered due to gains in its holdings of roughly 11,500 bitcoin. (Barron’s)

🏦 Mohamed El-Erian called for Fed Powell to resign. The leading economist said he should voluntarily relinquish his position to ensure central bank independence: “If Chair Powell’s objective is to safeguard the Fed’s operational autonomy (which I deem vital), then he should resign.” (CNBC)

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Rapid-fire

• Elon Musk is working to raise up to $12 billion for xAI chips (WSJ)

• Shares of Kohl’s surged 34% and saw a temporary trading halt Tuesday (CNBC)

• Coco-Cola posted mixed second-quarter earnings results, missing on revenue and beating on EPS (Barron’s)

• JPMorgan is considering launching crypto-backed loans for clients (CoinTelegraph)

• President Trump is exploring removing capital gains taxes on home sales (WSJ)

• Treasury Secretary Bessent said Fed Powell doesn’t need to resign but should conduct an internal review (CNBC)

• Philip Morris stock drops after missing sales estimates for the quarter (Investopedia)

• Economic data is keeping the good times rolling for investors (Pomp Letter)

• Markets want rate cuts, not a compromised Fed (Opening Bell Daily)

Last thing

About me

📰 I’m Phil Rosen, co-founder and editor-in-chief of Opening Bell Daily. I’ve published books, lived on three continents, and won awards for my journalism, which has appeared in Business Insider, Fortune, Yahoo Finance, Bloomberg and Inc. Magazine.

I write our flagship newsletter to prepare you for each trading day — unpacking markets, economic data and Wall Street with analysis you won’t find anywhere else.

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