Amazon’s Stock Tanks—Is This the Beginning of the End for the Magnificent 7?

Amazon just got mauled by the bears—and Wall Street's darlings might be next.

What's killing the tech titan?

Supply chain snarls? Regulatory claws? Or just investors finally waking up to reality? The 'Magnificent 7' have been printing money for years, but even golden geese eventually stop laying eggs.

Here's why the smart money's watching Bitcoin while these dinosaurs bleed: decentralized networks don't have CFOs who miss earnings targets. Meanwhile, Amazon's still trying to figure out how to make 'just walk out' technology actually work.

Prediction: This correction's got legs. And no amount of stock buybacks can fix what's coming.

Key Takeaways

• Amazon.com's stock is getting pummeled, though the rest of the "Magnificent 7" stocks are holding up comparatively well.
• The Trump administration's new tariff plan and a weaker-than-expected jobs report interrupted an otherwise solid week of earnings reports.
• Traders are placing a higher probability of a September rate cut on Friday, reversing expectations from the day before. That's a possible silver lining for Big Tech shares.
  

Not all in the the Magnificent 7 is magnificent today.

Shares of the group of megacap tech stocks were falling Friday, with the Roundhill Magnificent 7 ETF (MAGS) recently down more than the broader market. The drop comes after a week of generally strong earnings results was interrupted by the TRUMP administration's latest tariff plan and Friday's weaker-than-expected jobs report.

Investors punished what they saw as the weakest link. Amazon.com's (AMZN) shares were down more than 7% Friday afternoon, weighed down by a sense that its results weren't as impressive as, for example, Microsoft's (MSFT). But the rest of the cohort—Nvidia (NVDA), Microsoft, Apple (AAPL), Alphabet (GOOG), Meta Platforms (META), and Tesla (TSLA)—held up better, falling roughly in line with the market.

The Trump administration's new tariff plan, set to take effect August 7, applies a broad 10% rate to countries with a trade surplus with the U.S. and a 15% rate to those with a trade deficit. Between the lines: A vast majority of imports are set to get taxed at a higher rate, raising inflation and growth fears. Meanwhile, U.S. job growth in July slowed, and the Labor Department revised May and June jobs numbers downward.

A silver lining in the cloud hanging over the powerful set of megacap tech stocks is higher odds of the Federal Open Market Committee cutting rates in September, which could be a boon to growth companies. The jobs weakness could spur the Fed to reconsider maintaining its current rate policy as it strives to keep to its two primary goals of maximum employment and stable prices.

Indeed, odds of a September rate cut have quickly changed. Traders now see a near-80% probability that the central bank trims the Fed funds rate by a quarter percentage point next month, up from less than 40% yesterday, according to CME FedWatch. That WOULD lower borrowing rates, which tends to help growth-oriented companies.

Meanwhile, on the earnings front, investors will now turn their attention to chip giant Nvidia, which reports August 27.