As the Magnificent 7 companies have estimated a total capital expenditure of over $330 billion on the artificial intelligence infrastructure in 2025, there is a possibility that China’s AI breakthrough, despite chip shortage, could affect their targets, affecting profitability.
What Happened: The Magnificent 7 companies are widely expected to spend more than $330 billion on capex in 2025. While the chipmaker Nvidia Corp. NVDA hasn’t explicitly mentioned a target during its earnings call, the iPhone maker Apple Inc. AAPL broadly expects to spend $500 billion over the next four years.
The remaining companies, however, have provided a specific target for 2025.
| Stocks | CAPEX Target For 2025 | YTD Performance |
| Nvidia Corporation NVDA | – | -13.58% |
| Apple Inc. AAPL | – | -12.24% |
| Microsoft Corp. MSFT | $80 Billion | -7.14% |
| Amazon.com Inc. AMZN | $100 Billion | -11.12% |
| Alphabet Inc. GOOGL | $75 Billion | -13.27% |
| Meta Platforms Inc. META | $65 Billion | 0.94% |
| Tesla Inc. TSLA | $11 Billion | -37.25% |
According to Edward Yardeni, the President of Yardeni Research, the “AI bubble” could be “bursting” as China continues to scale its AI-linked technology with inexpensive chips.
He said, “The fear now is that open-source large language models (LLMs) like DeepSeek and Manus, developed in China, require much less powerful semiconductors to operate.”
“If so, then AI capital spending will tumble along with the profit margins on AI systems,” adds Yardeni.
Why It Matters: All Magnificent 7 companies have underperformed in 2025, except Meta Platforms Inc. META. The exchange-traded fund that tracks these seven companies, Roundhill Magnificent Seven ETF MAGS, has declined by 12.87% on a year-to-date basis.
Since DeepSeek was introduced on Jan. 24, MAGS has been down by 16.21% according to Benzinga Pro.
The underperformance of Magnificent 7 companies can be attributed to "interest rate sensitivity," "unraveling trade tensions," and the high concentration of these stocks in the S&P 500's market capitalization amid the market correction, according to John Murillo, the chief dealing officer at B2BROKER.
Price Action: The SPDR S&P 500 ETF Trust SPY and Invesco QQQ Trust ETF QQQ, which track the S&P 500 index and Nasdaq 100 index, respectively, rose on Monday. The SPY advanced 0.77% to $567.15, and the QQQ also jumped 0.65% to $482.77, according to Benzinga Pro data.
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