Heavy AI infrastructure spending is drawing investor scrutiny even as semiconductor and memory stocks continue to rally on supply shortages and stronger near-term demand.
The Magnificent Seven have lost about $2.3 trillion in market value this month as investors question whether the group’s huge spending on artificial intelligence infrastructure will generate timely returns. The CNBC Magnificent 7 Index is down 10% in June, with Microsoft falling 20%, Nvidia about 13%, and Apple and Amazon around 8%. The group — Microsoft, Nvidia, Alphabet, Apple, Meta, Tesla and Amazon — has been spending heavily on chips and data centers to support AI services, with Amazon, Microsoft, Alphabet and Meta leading that push. Some of that investment is being financed with debt, and attention is now turning to second-quarter earnings next month for evidence that the outlays are starting to pay off. At the same time, investors have continued to favor parts of the AI supply chain seen as clearer beneficiaries of the spending. The Philadelphia Semiconductor Index is up around 6% this month and more than 90% this year, versus a 3.4% decline for the Magnificent Seven. Memory has emerged as a key bottleneck, helping drive the Roundhill Memory ETF up 166% this year as shortages and high pricing support the sector. Analysts at HSBC and UBS said recent results and supply-chain conditions suggest the broader AI growth story remains intact, even as leadership within technology stocks shifts.