A tumultuous week, despite NVIDIA being heavily impacted, the overall Mag 7 of the US stock market remains "unshaken."

Despite the "DeepSeek shock" faced by the US stock market in the past week, tech giants have withstood the market test, and the overall Mag 7 remains highly favored, with the market satisfied with strong earnings performance.

After a turbulent week, tech giants performed steadily. Despite facing new risks and valuation pressures, investors remain firmly betting on these tech giants. The performance of the four major tech companies generally aligns with the commitments implied by their massive market capitalizations, alleviating concerns brought by DeepSeek.

Specifically, Meta boosted market confidence with better-than-expected growth in its advertising business, Tesla stabilized through cost control, and Apple's service revenue hit a record high, while only Microsoft's cloud business slowdown dragged down its stock price.

Both Apple and Meta's stock prices rose this week, pushing the S&P 500 index to a new all-time high. Despite NVIDIA and other artificial intelligence infrastructure stocks performing poorly, the so-called Mag 7 (including Microsoft, Amazon, Alphabet, and Tesla) was largely unaffected this week and remains favored by shareholders.

Over the past two years, most of the S&P 500's gains have come from these seven giants. As profit growth slows and valuations become excessive, investors are increasingly hoping for outstanding performance from the other 493 companies.

Michael Bailey, research director at Fulton Breakefield Broenniman LLC, stated:

Investors may have been quite optimistic at the beginning of the week, shaken midway, and then several big players stepped up to say everything is fine. They did not wave the white flag. They should be the smartest people in the room, and they did not panic.

Optimistic Earnings Outlook, AI Investment Returns Under Scrutiny

According to data compiled by Bloomberg Research, the profit growth expectation for the Mag 7 in the fourth quarter has been raised from 22% at the beginning of the week to 26%. Although this is lower than the 51% increase in the first quarter of last year, marking the fourth consecutive quarter of slowing growth, it is still far above the S&P 500's expected 10% growth.

Adam Sarhan, CEO of 50 Park Investments, stated in an interview with Bloomberg:

I am very satisfied with the strength of the earnings performance, and the market feels the same. Overall, most stocks are rising. The fundamentals remain intact.

Compared to this week's actual performance, comments during the earnings call seem to resonate more with investors who need reassurance amid the disruptive threat of DeepSeek.

**Meta CEO Mark Zuckerberg expressed confidence in the company's AI strategy and dismissed concerns about excessive spending on AI infrastructure. This performance overshadowed disappointing revenue forecasts, boosting the stock price, which closed up 6.4% this week. The company has risen for 10 consecutive days, marking its longest winning streak in nearly a decade **

However, with the emergence of DeepSeek and the slowdown in profit growth, the pressure on tech giants to demonstrate returns on AI investments will increase in the coming months. Dave Mazza, CEO of Roundhill Investments, pointed out that this is particularly important given the high valuations of these companies.

Bloomberg's index tracking the "seven giants" stocks shows that these companies have a price-to-earnings ratio of 31 times, up from about 20 times at the end of 2022, and far exceeding the 22 times of the S&P 500 index. Despite facing challenges, the "seven giants" remain favored by investors. Mazza acknowledged:

We are currently in a period of heightened animal spirits and euphoria, so the price-to-earnings ratio may continue to rise in the short term