Meta Platforms (META, Financial), the parent company of Facebook, has recently entered negative territory for the year, marking the last of the "Magnificent Seven" tech stocks to lose its year-to-date gains. The company's stock dropped 3.7%, continuing a recent sell-off, and is now down 0.5% for the year. This decline is notable following a historic rebound where the stock rose for 20 consecutive trading days, peaking at a nearly 26% increase in 2025, only to erase all gains since then.
KeyBanc Capital Markets analyst Justin Patterson cited increased macroeconomic uncertainty as a reason for lowering Meta's price target from $750 to $710. He noted that investments in AI have reduced Meta's financial flexibility, increasing fixed costs and limiting its ability to cut expenses during economic downturns. Patterson also mentioned that Alphabet (GOOGL), another member of the "Magnificent Seven," faces similar challenges.
The tech sector has been under pressure this year due to the previous administration's tariff policies and uncertainties about the future of AI development. The "Magnificent Seven," which includes Apple (AAPL), Microsoft (MSFT), Nvidia (NVDA), Amazon (AMZN), Tesla (TSLA), Alphabet, and Meta, are considered beneficiaries of AI advancements. However, Bloomberg's index tracking these tech giants has dropped 16% this year, down more than 20% from its December peak. Notably, Tesla has declined 44%, while Alphabet and Apple have each fallen 15%, and Nvidia is down 14%. The index fell 2.5% on Tuesday.
Meanwhile, the Nasdaq 100 index has decreased 7.3% for the year, recently entering a correction phase, now more than 12% below its peak. The strong performance of these major tech stocks over the past two years has made them a popular choice for investors looking to take profits during uncertain times.
