Big Tech is no longer leading the 2025 market rally

Wall Street’s Magnificent 7 are losing their shine, with the indices that track tech heavyweights Apple, Alphabet, Amazon, Tesla, Meta, Microsoft, and Nvidia now lagging behind the S&P 500 throughout the year so far, Bloomberg notes.

(Tap or click the headline above to read this story with all of the links to our background as well as external sources.)

It’s only the second time in a decade that tech’s powerhouses have underperformed the broader market during the year, a sharp turnaround from 2024 when tech and telecom stocks led the S&P 500 to a historic 23% annual gain.

BY THE NUMBERS- The now not-so-magnificent tech stocks are collectively down 4.4% since the start of the year, while the broader index has recently emerged back in the green at 1.4% following the announcement of a temporary US-China trade war truce earlier this month. This is in stark contrast to the decade-long view, which saw the S&P 500’s 181% gains dwarfed by Big Tech’s 2179% gains.

Investors are now looking toward other sectors, including industry, utilities, and finance, which are fueling investors’ interest this year. The move signals a sea change in approach as investors start to focus more on company fundamentals than macro uncertainty. “The market is starting to look back more at individual stocks and companies and financial strength and innovation,” RGA Investments CIO Rick Gardner told Bloomberg.

But some still see an approaching Big Tech comeback in the cards, including Gardner who has been building up his stock portfolio on the assumption of a recovery. Hedge funds are also slowly returning, with Goldman Sachs’ prime brokerage reporting the fastest US equity buying since April 9 — the day markets surged on Trump’s tariff reprieve — which was led by tech stocks.

Not all of tech’s biggest names are having a bad year, with Meta up 9.4% YTD and Microsoft gaining 8.9% since the start of the year, boosted by solid earnings and limited China exposure. Despite initial concerns, Nvidia is flat for the year ahead of its next earnings release on 28 May.

Taking the Maginificent 7 down a peg or two could be good for the market overall, with the S&P 500’s ability to climb despite Big Tech losses a sign of a healthier and more sustainable market, according to Principal Asset Management CIO George Maris. “You probably have a healthier, more fundamentally-oriented market if you have greater participation across the investment universe,” he explained.

MARKETS THIS MORNING-

Asian markets are in the green in early trading this morning. Japan’s Nikkei is up 0.6%, Korea’s Kospi is looking at gains of 0.1%, the Shanghai Composite and the Hang Seng are both in the green, up 0.3% and 1%, respectively.

THE CLOSING BELL: TADAWUL-

The TASI fell 0.3% yesterday on turnover of SAR 4.8 bn. The index is down 5.2% YTD.

In the green: Al Baha (+6.7%), SPPC (+5.1%) and NCLE (+4.8%).

In the red: MESC (-5.8%), Gasco (-4.7%) and eXtra (-4.7%).

THE CLOSING BELL: NOMU-

The NomuC fell 0.6% yesterday on turnover of SAR 27.4 mn. The index is down 12.6% YTD.

In the green: Enma Alrawabi (+7.9%), Tharwah (+7.6%) and Paper Home (+6.6%).

In the red: Naseej Tech (-9.3%), Ghida Alsultan (-8.6%) and NBM (-7.7%).

CORPORATE ACTIONS-

Al Hassan Ghazi Ibrahim Shaker’s board (Shaker Group) recommended a SAR 27.8 mn dividend distribution for FY 2024 at SAR 0.5 a piece, the home appliances importer and distributor said in a bourse filing (pdf). The distribution is set to begin on Thursday, 29 May.

Alujain Corporation’s board greenlit a SAR 51.9 mn dividend distribution for 1Q 2025 at SAR 0.75 a piece — in alignment with its recently approved policy, it said in a disclosure to Tadawul. The distribution date is set for Monday, 2 June.