12-08-2025
Mag 7 & AI: Playing for 'big gains' can also mean 'big losses'
The tech-heavy Nasdaq Composite (^IXIC) is on track to hit another fresh record high with "Magnificent Seven" names like Alphabet (GOOG, GOOGL) and Microsoft (MSFT) contributing to gains.
Bianco Research president Jim Bianco, Yahoo Finance Senior Reporter Brooke DiPalma, and Yahoo Finance Senior Reporter Ines Ferré join Opening Bid with Yahoo Finance Executive Editor Brian Sozzi to discuss how to invest in the Mag 7 and other artificial intelligence (AI) plays like Palantir (PLTR), (AI), and CoreWeave (CRWV).
To watch more expert insights and analysis on the latest market action, check out more Opening Bid.
You can't just come out here and uh talk about a potential stock crash for the for the sake of doing. There has to be a trigger point. And I think you brought up a good point earlier in the show that maybe we do get the 10-year yield going to 5%. Is that the trigger that would uh I guess just send big tech back into profit taking mode?
I mean, it could. You know, it definitely could because if you look at the flows, the one thing that people forget is that there's massive flows into bond funds and there's massive interest in yield right now because there is a yield. Because and if we were to get more yield into bond funds and the like, you could see money moving that way and that could definitely give in to digestion. And keep in mind, if you take the top Meg 7 or the top 20 tech stocks out of the S&P, it's hardly doing anything. The Russell is still down on the year and the midcap, which is still unchanged on the year because they don't have very much of this big AI tech in it. So if you were to get higher rates, it could really be a drag on the stock market even further.
Jim, I imagine you get a lot of questions from your clients and folks that use your research on the Meg 7. What are you telling them to do with some of these names today?
That's a good question because I think it's a it's a it's a risk. It's definitely it's a risk. I think you need to understand that if you want to play some of these Meg 7s, you want to play them for big gains, you also have to be prepared for big losses. So you need to adjust your risk. I think the problem I see with a lot of people is they think it's all a one-way street. That you know, they look at all the the rallies in some of these stocks and I'm thinking Palatine here right now and they think that it's just, well, that's the way it's going to be and it's just a money money printing machine. Well, it is until it isn't. And that's the biggest risk you have to take with them.
Yeah, uh you can go look no further than C3 AI. I mean, the stock crashed yesterday and is and I think it was a real wake-up call to folks that not all AI stocks are created equally, even if you have AI in your corporate name.
Exactly. And we have had uh Wall Street analysts talk about that that you really want to stay within the ones that are um doing well, that have strong earnings. And of course, everyone names those uh big uh Meg 7 stocks and and the uh big players within um within AI. But uh so not all of them are created equally. But look, um you've had BFA uh BFA's Hartnett talk about uh the risk of a bubble and signs of a bubble. And I mean, you've had investors and retail investors coming in uh and and buying aggressively and there's been a lot of dip buying. Um so the investors have been increasingly going further and further out into risk and you've we've seen we saw recently just a couple weeks ago this sort of meme craze again. So there when you get this when you when you get to these levels and you're near record high levels, you expect a pullback at some point. We just don't know what the catalyst is going to be and sometimes it happens like that. Something happens and then you see a pullback.
Brook, real quick, um you know, Corrive stock hasn't gone anywhere since June.
Yeah, well, certainly what we've seen though is a bit of a move in these, you know, summer months as these companies reported. We do know that over the past month alone, as we got more data out from these key AI players that Corrive has moved in line. But now we're seeing Corrive under a bit of pressure as maybe this hype around how the company is playing into the AI revolution is not all that it's banked up to be after such a premium, such a run since its IPO, we are seeing it under pressure this morning. But certainly, what I, you know, also want to say is that before before, uh you know, Corrive sort of has played such a role in this picture, we did see during that sell-off in April, so many investors move away from these Meg 7 as this fear really roiled the markets. And now we've seen investors, as these earnings like NES said, have really come to fruition, have really surprised investors. We see retail investors looking to get back in. And so it'll be it remains to be seen really how Corrive does play into this picture, but we know that over the past month, the results from these big AI players have led to results for Corrive.
