The great rotation: Investors desert the Magnificent 7, crypto for AI bottlenecks

2 min readMake preferred on ShareShare this articleCopy linkX iconX (Twitter)LinkedInFacebookEmailMake preferred on (Shutterstock)SummaryShowThe so-called Magnificent 7 stocks and bitcoin have lost momentum, with Microsoft down 33% from its highs, Meta down 28% and Tesla down 20% while bitcoin (BTC) holds about 50% below its October peak.Investors are rotating into semiconductors, memory stocks and SpaceX-linked opportunities as concerns grow over the sustainability of hyperscalers' massive AI spending plans.The Magnificent 7's AI-driven growth story is facing a reality check. The best-performing stocks of the past decade are coming under pressure as investors question the enormous cost of the AI arms race and rotate into new fields with stronger momentum. Microsoft (MSFT) is down 33% from its recent highs, while Meta (META) has dropped 28%. Tesla (TSLA), Amazon (AMZN), Nvidia (NVDA) and Alphabet (GOOGL) are all trading more than 10% below, with Apple (AAPL) the best performer at -7%. The rotation extends to crypto too. Bitcoin BTC$63,901.83 has slumped about 50% from its October all-time high. It's not as though capital has given up on AI entirely. Instead, it's flowing into the companies that provide the infrastructure that the boom feeds on. Beneficiaries include chipmakers, including memory-chip producers, and real estate, needed to host the vast server farms that support AI processing. The biggest winners from the rotation have been memory and semiconductor stocks. Memory-chip maker Sandisk (SNDK) has surged roughly 800% this year and the Global X Artificial Intelligence & Technology ETF, which focuses on memory-related companies (DRAM), is up about 140%. In microprocessors, Micron Technology (MU) has gained about 230% this year, and the VanEck Semiconductor ETF (SMH) 67%. The investments highlight a growing preference for the companies supplying the infrastructure behind the AI boom rather than the hyperscalers funding it. In addition, capital has been attracted SpaceX (SPCX), Elon Musk's space exploration company that is also expanding into AI. Last week, the company raised $75 billion in the largest IPO in history. While AI has become the market's dominant investment theme, the cash required to feed the growth is rising even faster. Google parent Alphabet (GOOGL), Amazon, Microsoft and Meta are expected to spend a combined $725 billion on capital expenditures this year, a 77% increase from last year's record level. Free cash flow is no longer fully funding these ambitions. Alphabet, Amazon and Meta, collectively borrowed some $93 billion last year, accounting for roughly 6% of total corporate bond issuance. Another source of support is also fading. Share repurchases have fallen 33% to $132 billion in 2025, reducing a key pillar of demand for these stocks. The story today is not just about concerns over AI spending. It is also about capital rotation. Investors are moving out of the Magnificent 7 and crypto, two of the market's biggest winners over the past several years, and reallocating toward semiconductors, memory, and SpaceX-linked opportunities that are increasingly viewed as the next beneficiaries of the AI investment cycle. Related AssetsBitcoin$63,901.831.28%Latest Crypto News 1Hive shares jumps 10% on $220m Canada sovereign AI infrastructure deal10 minutes ago2Bitcoin's nemesis, the Dollar Index, is on the verge of a major breakout49 minutes ago3Aster popped over 10% on radical 'buyback and burn' upgrade. But gains were short-lived57 minutes ago4Crypto market positioning is 'defensive and thin' after Fed, Marex analysts say1 hour ago5Malta's financial regulator explores bringing parts of DeFi under MiCA's orbit1 hour ago6The bond market is flashing a clear signal on interest rates. Bitcoin bulls should take note4 hours ago7Live markets: DXY Index breaks higher as bitcoin tries to weather stronger dollar5 hours ago8Strategy's STRC preferred stock hits a record low below par6 hours ago9XRP slips 4% below $1.20 after breakout rally stalls near key resistance6 hours ago10Buying bitcoin below its 200-week average has historically delivered over 100% in median returns, Kraken says6 hours agoLatest Research CEX Volumes Drop to Lowest Since September 2024 as RWA Perps Hit Record HighCEX Volumes Drop to Lowest Since September 2024 as RWA Perps Hit Record HighIn May, combined exchange volumes fell 3.45% to $4.41T; the lowest since September 2024. RWA perpetual futures volumes rose 10.4% against the trend, hitting a new all-time high. In May, combined exchange volumes fell 3.45% to $4.41T; the lowest since September 2024. RWA perpetual futures volumes rose 10.4% against the trend, hitting a new all-time high. In May, combined exchange volumes fell 3.45% to $4.41T; the lowest since September 2024. RWA perpetual futures volumes rose 10.4% against the trend, hitting a new all-time high.

The great rotation: Investors desert the Magnificent 7, crypto for AI bottlenecks

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The great rotation: Investors desert the Magnificent 7, crypto for AI bottlenecks

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