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MAG7 is down compared to SP500 YTD. If you look at the forward earnings for a few of them, NVDA is trading at 17x, GOOGL at 21x, MSFT at 24x, META at 20x.
If you include the broader AI related sector, they are currently roughly trading at 20x forward earnings down from 29x back in October 2025, their average since 2015 was 25x.
The hyperscalers (META, AMZN, GOOGL, MSFT) as a % of S&P500 earnings are around 21% yet their market cap in the S&P500 is only 16%. This difference of -5% is a record low, indicating investor skepticism AI spending will pay off. The market has already priced in a large margin of safety, and today's valuations are in my opinion more reasonable than they have ever been. There are very rare cases where such quality companies that are growing at double digit pace with such compressed valuations.
I know it can be hard for people to take a step back and try to look at the sector objectively because of the negative connotations with AI. But the "pop" has been happening, it's been happening for the last year.

MAG7 is down compared to SP500 YTD. If you look at the forward earnings for a few of them, NVDA is trading at 17x, GOOGL at 21x, MSFT at 24x, META at 20x.
If you include the broader AI related sector, they are currently roughly trading at 20x forward earnings down from 29x back in October 2025, their average since 2015 was 25x.
The hyperscalers (META, AMZN, GOOGL, MSFT) as a % of S&P500 earnings are around 21% yet their market cap in the S&P500 is only 16%. This difference of -5% is a record low, indicating investor skepticism AI spending will pay off. The market has already priced in a large margin of safety, and today's valuations are in my opinion more reasonable than they have ever been. There are very rare cases where such quality companies that are growing at double digit pace with such compressed valuations.
I know it can be hard for people to take a step back and try to look at the sector objectively because of the negative connotations with AI. But the "pop" has been happening, it's been happening for the last year.