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Magnificent 7 Stocks

Lucy Brewster

brewmarkets.com

The government shutdown has barely made a dent in the S&P 500’s record run.

Today, OpenAI completed a deal to help its employees sell shares at a jaw-dropping 

, topping Elon Musk’s SpaceX (worth $400 billion) as the most valuable private company in the world. The deal was viewed by Wall Street as a vote of confidence that the AI rally in stocks has plenty of room to run.

According to Bloomberg, employees sold about $6.6 billion worth of stock to a group of investors who valued OpenAI at far above its previous $300 billion price tag, which it reached in a SoftBank-led funding round earlier this year. The secondary share sale is intended to help OpenAI retain top employees amid an increasingly cutthroat talent war among tech bigshots, while also opening the door for more investors to get some skin in the company’s game.

To put OpenAI’s latest valuation in perspective, its market value is now on par with ExxonMobil, which reported revenue of about $350 billion last year and profit of over $30 billion. OpenAI, by comparison, is projecting a revenue figure of $13 billion this year and is losing billions, according to the 

OpenAI’s skyrocketing valuation had a major imprint on the public markets. Global chip stocks climbed today, particularly in Asia where CEO Sam Altman has been inking deals with South Korean chipmakers as part of the AI giant’s Stargate data center project.

The demand for the fresh batch of OpenAI stock, even at a valuation of $500 billion, illustrates how rabid the hype around AI has become. Despite sticky inflation, tariffs, and a rickety labor market, it seems the only thing investors are focusing on is making it rain for a narrow group of AI-focused tech companies.

But there remain a fair share of doubters about whether the rally can sustain itself. Tech giants are going to spend roughly $400 billion in 2025 on AI-related infrastructure, a gargantuan sum that some skeptics are 

, nevermind the question of whether they can afford it.

Bulls, however, argue that AI will be transformative on the scale of the invention of electricity, and say that fears of a bubble are overblown. After a brief pullback in AI enthusiasm last month due to a slew of 

, it seems traders are back on the bandwagon.

“One AI bubble has already burst—the bubble in saying there’s a bubble,” explained Deutsche Bank analyst Adrian Cox, who cited Google Trends data showing a decline in people searching for the term “AI bubble” over the past month.—

OpenAI CEO Sam Altman speaks at a presentation

AI mania is getting even more manic 

OpenAI just snagged a $500 billion valuation. 

It feels like the chipmakers powering the AI boom are busier than former 

 contestants lining up brand deals before their 15 minutes of fame run out.

This week brought a slew of news from the semiconductor industry, but perhaps the biggest development of all came today: Nvidia just 

, investing $5 billion in the company to develop chips together for PCs and data centers. Intel soared 22.77% on the news.

Nvidia’s partnership arrives just weeks after the US government took a 10% stake in Intel. After today’s rally, the government’s stake is now worth roughly $14 billion—a nearly $5 billion gain since the US became an Intel shareholder.

Nvidia’s investment and the market’s reaction was just another example of how dominant the company has become, argued Wedbush analyst Dan Ives in a note today. “The chip landscape remains NVDA’s world with everybody else paying rent as more sovereigns and enterprises wait in line for the most advanced chips in the world,” wrote Ives. “Today's announcement further strengthens the US lead in the AI Arms Race against China as Intel now goes from a laggard to a catalyst.”

While the US works to tighten its grip on the AI market, China is working hard to break it.

Huawei Technologies just revealed its multiyear plan to grow into a formidable competitor to Nvidia, laying out 

 such as memory chips and AI accelerators in a presentation this morning.

Remember DeepSeek, the Chinese startup that handed Silicon Valley 

 last year when it revealed its LLM can do what US bots can do at a fraction of the cost? Today, the company revealed the price tag of its newest generative AI chatbot: 

, or just a fraction of what the Magnificent Seven spent to build their own large language models.

Speaking of spending, Chinese tech behemoths Alibaba Group, Tencent, and Baidu have gotten serious about AI infrastructure, issuing bonds to 

 this month alone to fund their efforts. In order to catch up in the AI race, those three and JD.com could shell out $32 billion in capital expenditures this year, according to Bloomberg, up from $13 billion in 2023.

While that may be impressive, Nvidia, Alphabet, Amazon, and Meta Platforms plan to spend a combined $400 billion on AI in the coming year. But that raises the inevitable question: Are Chinese AI companies starting to get more bang for their buck? And if so, what does that mean for a stock market that depends on the Magnificent 7?—

Nvidia and Intel strike a deal

But China refuses to be left behind in the AI race.

Chip battles heat up

Mark Reeth

The Magnificent 7 was already a small club. Today, Alphabet entered an even more exclusive group, becoming the fourth publicly traded company to hit 

It's just the latest victory for Alphabet, which has been riding high ever since a judge ruled that the company would not have to be broken up, despite a court deeming its search business an illegal monopoly back in August 2024. Ironically, the recent ruling was due in no small part to rising competition from AI startups like Perplexity and OpenAI—only a company as massive as Alphabet could climb thanks to 

Alphabet looked like it was a step behind its rivals when it first rolled out its AI chatbot Bard in February 2023, only to watch the bot flub questions live on camera and subsequently 

. Since then, Alphabet has beefed up its AI department, spending $67 billion in just the last 12 months to stay a step ahead of its rivals.

It’s clearly working: Over the weekend, the company’s Gemini chatbot overtook ChatGPT as the 

Alphabet shares are up about 71% since the stock hit its April low, and at this rate, it’s only a matter of time until the company enters the $4 trillion club.

Alphabet hit $3 trillion market cap

The search giant's AI chatbot outranks ChatGPT on the Apple app store.

In da clerb, we all fam

Despite endless speculation about the necessity of spending 

 on AI hardware, the infrastructure powering the AI boom keeps proving it's a red-hot business.

At least that’s what investors surmised from 

 with Amsterdam-based AI computing company Nebius. Shares of the company that sounds like a video game your brother played in seventh grade soared 49.42% today, while Microsoft ended the day nearly flat.

 The agreement gives Microsoft access to Nebius’s AI infrastructure for five years, and the price tag could reach $19.4 billion if Microsoft ups its demand for data centers. Nebius management thinks that this is only the beginning of more good things to come. “We have also said that, in addition to our core business, we expect to secure significant long-term committed contracts with leading AI labs and big tech companies,” explained CEO Arkady Volozh in a statement.

Nebius’s competitor, CoreWeave, also popped 7.13% today, given the news is a boon for the AI hardware business at large.

Nebius was spun out of Russian search and internet giant Yandex. Today’s record-breaking jump comes after an already stellar year for the company, during which it has nearly doubled its share price.

Everyone wants hardware…but also software:

 It’s not a story about AI unless we mention fan favorite Nvidia, which is an investor in Nebius and names the 

. Even as today’s news reaffirms the race for AI hardware, it also indicates that the software layer will play a key role. After all, Nebius’s core business is a cloud computing platform on which chips (like Nvidia’s) run.

If you sensed a wave of relief from the market today, it’s because AI spending has become somewhat of a touchy topic for investors, who 

 on fears that the AI trade was sputtering.

After all, AI spending isn’t just high-stakes for big tech companies and data center providers. It’s also the pillar supporting the entire AI trade—and therefore the entire stock market, given Nvidia alone now accounts for roughly 8% of the S&P 500.

The pros are already speculating how rough the hangover could be if all this AI spending turns out to be frivolous. Goldman Sachs analyst Ryan Hammond wrote in a note last week that he expects AI capex spending to taper off late this year and into 2026, something that, “would likely be accompanied by a deterioration in the outlook for long-term AI-driven earnings growth, weighing on valuations as well.”

But today’s deal between Microsoft and Nebius proves that the spending spree isn’t over just yet.—

Microsoft buys Nebius for $17.4 billion

Investors took the deal as a sign that there's still demand for AI hardware.

AI spending is alive and well

How skinny Apple can make the iPhone has become one of the most highly watched metrics of technological progress in the world. But even a smaller bulge in your pocket wasn’t enough to wow investors.

The main character of Apple’s product launch event in Cupertino today was the new 5.6 mm iPhone 17 Air, which is roughly a third narrower than current models and priced at $999—$100 more than last year’s iPhone 16 Plus.

While the super skinny iPhone is certainly striking, the iPhone 17 Pro and and iPhone 17 Pro Max tout even more impressive features, including a totally new camera system and extended battery life. The premium models will be priced at $1,099 and $1,199, respectively.

“We expect this new model to have significant demand as it is the first notable redesign to the iPhone lineup in years,” wrote Wedbush analyst Dan Ives of the new iPhone Air. He estimates that roughly 315 million of the 1.5 billion iPhone users worldwide haven’t upgraded their iPhones in over four years, which he argues could spur on higher demand for its newest models.

But investors still pushed shares of Apple down 1.48%, partially because some were expecting 

 on the new iPhone models to offset the cost of tariffs.

While Apple unveiled a slew of new products and features today, including major upgrades to AirPods and the Apple Watch, investors remain worried that the company doesn’t have the chops when it comes to artificial intelligence.

The company has been slower to roll out impressive AI tech than upstart rivals like OpenAI and even fellow Silicon Valley veterans like Microsoft. Earlier this year, Apple had to 

 on its revamped Siri voice assistant, complete with new Apple Intelligence technology, when it didn’t live up to the company’s technical standards. Meanwhile, competitors like Meta Platforms have poached some of its 

All of that explains why Apple’s stock is down 6.42% this year, despite it beating top- and bottom line earnings expectations for its third quarter back in July.

AI may be a convenient acronym for Apple Intelligence, but the company isn’t synonymous with the new tech just yet. Today was more of what we got at its Worldwide Developers Conference in June—which is to say, not much at all.—

Apple's skinny iPhone reveal: Stock market reaction

Investors largely shrugged at Tim Cook's latest phones, including the thinnest yet.

Even the iPhone is on Ozempic

Judy Dutton

Google may be America’s go-to search engine, but that doesn’t mean it’s a monopoly in need of a massive breakup—at least, not yet.

In one of the biggest antitrust cases in decades, US District Judge Amit Mehta 

 many of the Department of Justice’s harshest proposals for Alphabet—including breaking the company up. “Google will not be required to divest Chrome,” Mehta said in his ruling, pointing out that chatbots and other AI technologies that work like search engines present enough of a threat to the tech company’s search dominance that the court does not need to step in and break up a fight that’s barely begun. “The emergence of GenAI changed the course of this case.”

This win, after five years of legal battles, sent Alphabet shares soaring 9.01% to a new all-time high—but the victory was not absolute. The judge ordered Alphabet to share certain data on search index and user interaction, although not for ads. The court also ruled that Alphabet must end its practice of “compelled syndication,” or striking deals with companies that locks in its search engine as the default for browsers and cellphones and locks out competitors.

Alphabet may not be able to shut out its search rivals anymore, but the court ruled that it can still pay for the privilege of becoming a platform’s default search engine. That’s fantastic news for Apple, which rakes in an estimated $20 billion a year from Alphabet for giving Google prime placement on iPhones.

That money, which comes at little to no cost, has proven pivotal to supplementing Apple’s margins and cushioning its bottom line at a time when the company has struggled. Its cash cow, the iPhone, has been sputtering along at just 2% annual revenue growth for the past three years, and pressure from President Trump to move manufacturing to the US threatens to cut into profits.

Apple has also been slow to catch up in the AI race, which could lead to a shockingly ho-hum unveiling of the 

 next week. Just yesterday, Meta Platforms poached a handful of the company’s 

 isn’t over yet: Mehta ordered all parties to convene again by Sept. 10 for the final verdict. In the meantime, though, two tech titans are breathing easier, and that’s great for the entire market, which 

Alphabet's courtroom victory: What it means for Apple

Alphabet won't be broken up, and Apple keeps getting free money.

Google scores a big win...for Apple

For months now, investors have lived in fear that the stocks propelling the entire market higher could stumble—and bring the whole S&P 500 down with them.

This week, it feels like the dominos have started to fall, and the anxiety about an AI bubble is reaching a fever pitch. The latest indicator: today’s announcement that Meta Platforms is freezing its 

The tech titan has shelled out incredible paychecks to bring researchers aboard its AI unit as Mark Zuckerberg races rivals like OpenAI to become the biggest name in artificial intelligence. But even Big Bucks Zuck has a spending limit, and he’s decided to close up his wallet only a few days after news broke that Meta’s AI group is undergoing its 

Investors are starting to get antsy, and want to see some tangible result from big tech’s AI spending bonanza, in which Google, Amazon, Microsoft, and Meta will dole out a combined 

 just this year. Even crazier: a recent McKinsey report predicted AI spending will reach $7 trillion over the next five years to meet demand.

The hope is that this gargantuan spending will result in huge profits for these companies—but with actual returns remaining in limbo, this AI-fueled bull market is beginning to fizzle.

Today’s news from Meta is just the latest in a series of body blows to the AI trade this week.

Fears of a bubble forming in the AI space began after OpenAI CEO Sam Altman admitted that startup valuations are “insane.” The bad news kept coming when MIT published a study showing that 

In the days since, some of the highest-flying AI stocks on the market dropped hard. Palantir is the prime example: The secretive tech stock sold off for six days straight on the heels of a short seller report from 

 its high valuation, calling it “detached from fundamentals and analysis.”

Nobody knows for sure whether AI stocks are in a dot-com era bubble—not even us (shocking, we know). But FT editor John Thornhill 

: There will probably be multiple cycles of hype and crash as the AI revolution continues on. Bubbles can serve a purpose, he argued, resulting in the buildout of infrastructure that eventually leads to widespread adoption of the technology.

, now is the moment to buy the dip when it comes to these flashy, momentum-driven tech stocks. If you’re a big tech believer, right now offers a great entry point into these stocks, which have been on a tear over the past year.

But we can’t promise it’ll be a smooth ride upward anymore.—

Meta logo with a "not hiring" speech bubble