Tech Giants Drag Down Market in Not So Magnificent Q1 2025

Even before Thursday’s steep stock market selloff in the wake of “Liberation Day”, which saw the so-called Magnificent 7 lose more than $800 billion in market capitalization, 2025 was not a good year for U.S. tech giants and their shareholders. In the first quarter, Nvidia and Apple, the world’s most valuable companies for large parts of the past 12 months, were the largest negative contributors to the S&P 500’s lackluster performance, dragging the index down 1.42 percentage points and 1.06 percentage points, respectively. That means, the two companies alone accounted for more than half of the index’s negative 4.27 percent return in the first quarter of the year, with other Mag 7 stocks such as Tesla, Microsoft, Amazon and Alphabet dragging the index down even further.

According to Howard Silverblatt, senior index analyst at S&P Dow Jones Indices, the information technology and communication services sectors, i.e. most things tech, were responsible for 93.3 percent and 14.4 percent of the S&P 500’s total return of minus 4.3 percent in the first quarter. Excluding companies from these two sectors, the index's return would have been positive at 0.6 percent. Excluding just the Magnificent 7 would also have been enough to turn things around for the S&P 500, which would have returned 0.5 percent without the largest and most well-known tech companies in the world.