FOMO

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The bullish momentum of the “Magnificent Seven” stocks could be coming to an end due to investor disappointment related to a lack of technological development.
The Magnificent Seven is a moniker for the top-performing tech stocks: Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla.
The Magnificent Seven hype may be coming to an end due to investor disappointment related to <a href="https://cointelegraph.com/news/a-brief-history-of-artificial-intelligence" rel="noopener noreferrer nofollow">artificial intelligence</a>&nbsp;development, according to Sandeep Rao, senior researcher at Leverage Shares.
The researcher told Cointelegraph that advancements in AI have not significantly reduced the cost of human labor, which has left investors disillusioned:
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 “This promise has proven to be overstated, as the human labor cost savings in AI-heavy firms have so far been minimal.”
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This could lead to investors repositioning themselves and looking for other promising stocks to hold long-term, added the researcher.
Related: <a href="https://cointelegraph.com/news/bitcoin-price-drops-below-59k-institutional-stablecoin-pause" rel="noopener noreferrer nofollow">Bitcoin price drops below $59K as institutions stop buying stablecoins</a>
<h2 data-ct-non-breakable="true" id="will-ai-oversupply-crash-the-magnificent-seven">Will AI oversupply crash the Magnificent Seven?</h2>
Except for Tesla, which fell over 19% year-to-date (YTD), all other Magnificent Seven stocks are in the green, with Nvidia leading the pack, up over 117% YTD, <a href="https://www.tradingview.com/chart/3Z94myyP/?symbol=PYTH%3AGOOG" target="_blank" rel="noopener noreferrer nofollow">according</a> to Nasdaq data.
<figure data-ct-non-breakable="true"><img src="https://s3.cointelegraph.com/uploads/2024-08/14c29e0c-4ca6-4ff7-b911-0776bbe445a3.png" alt="Tech giants losing momentum as AI progress disappoints investors" title="">
 <figcaption style="text-align: center;">Magnificent Seven stocks, year-to-date chart. Source: TradingView
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However, AI-related spending from large companies has led to several AI models with capacities far exceeding those required to run the global internet.
This oversupply could make the cost recovery on these AI investments much longer, explained Rao:
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 “As a result, tech megacaps are likely to pump the brakes on AI-relevant spending and adopt a more milestone-driven approach, while investors, whose FOMO has largely dissipated, are now favoring higher diversification.”
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All of the Magnificent Seven stocks fell during the past month, with Tesla logging the biggest monthly loss of over 21%, followed by Nvidia with over 20%.
<figure data-ct-non-breakable="true"><img src="https://s3.cointelegraph.com/uploads/2024-08/6f73bf65-5b23-4d8b-88a4-a2387026fa71.png" alt="Tech giants losing momentum as AI progress disappoints investors" title="">
 <figcaption style="text-align: center;">Magnificent Seven stocks, monthly chart. Source: TradingView
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Related: <a href="https://cointelegraph.com/news/bitcoin-bear-trap-over-fractal-btc-price-parabolic-move" rel="noopener noreferrer nofollow">Bitcoin bear trap over? BTC price fractal hints at parabolic move next</a>
<h3 data-ct-non-breakable="true" id="magnificent-seven-crash-could-pressure-bitcoin-price">Magnificent Seven crash could pressure Bitcoin price</h3>
During last week’s <a href="https://cointelegraph.com/news/top-50-cryptos-lose-2024-gains-510b-selloff" rel="noopener noreferrer nofollow">$510 billion crypto market sell-off</a>, the Magnificent Seven stocks lost over <a href="https://cointelegraph.com/news/bitcoin-fall-50k-magnificent-7-stocks-500-billion-loss" rel="noopener noreferrer nofollow">$650 billion in cumulative</a> market capitalization during regular trading on Aug. 5.
Another potential decline in the Magnificent Seven could lead to lower Bitcoin (<a href="https://cointelegraph.com/bitcoin-price" rel="noopener noreferrer nofollow">BTC</a>) prices, according to Akshay Nassa, the founder of Chimp exchange. Nassa told Cointelegraph:
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 “The correlation between stock market performance and cryptocurrency values is well-documented; as major tech stocks falter, investor sentiment generally shifts away from alternative assets, including Bitcoin.”
</blockquote>
Alvin Kan, the chief operating officer of Bitget Wallet, also expects Bitcoin to be pressured from another potential decline in the Magnificent Seven.
Kan told Cointelegraph:
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 “If the Magnificent Seven, including Amazon and Apple, are falling, investors would want some form of insulation from even more risky assets like Bitcoin. This means that the extreme capital flight in the broader financial market can also weigh in on Bitcoin price.”
</blockquote>
Magazine: <a href="https://cointelegraph.com/magazine/bitcoin-price-prediction-ethereum-altcoins-crypto-trader-roman-hall-of-flame-cointelegraph/" rel="noopener noreferrer nofollow">Ethereum price will lag for ‘months’ as Bitcoin surges: X Hall of Flame, Roman</a>

Tech giants losing momentum as AI progress disappoints investors

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