A fire engine works its way up Eighth Avenue (Bruce Bennett/Getty Images)

Mangling of the Magnificent

Goldman Sachs sounds the alarm on Nvidia and the Magnificent 7

Nasdaq 100 rallies are to be sold, according to strategists at Goldman Sachs.

Luke Kawa

3/3/25 3:23PM

Ever since DeepSeek roiled markets, the AI trade vibes have oscillated between “it’s so over” and “we’re so back.”

Put Goldman Sachs firmly in the former camp amid another dreadful session in which Nvidia is down as much as 7%.

In a flurry of notes released late last week and over the weekend, strategists at the bank basically said that the party’s over for the megacap US tech trade. To sum up their case:

When a stock fails to respond to good news, that’s bad news.
The earnings growth that made the Magnificent 7 so magnificent isn’t as magnificent any more.
Hedge funds are dumping the cohort and other AI-linked positions.
Popular stocks could see a lot more of a valuation reset lower.

The strategists, in their own words:

Paolo Schiavone:

“The NVDA print was a clearing event — the reality is that from here the AI theme is for sale. In AI, investors are worried about 2026 growth not 25. Nasdaq 100 rallies will be used as liquidity events.”

Tony Pasquariello:

“We all knew it was coming, but the immense earning premium that you had earned in US mega cap tech vs everything else is narrowing. DeepSeek triggered a shift in the flow [of] capital away from the US plays. In a few ways, NVDA earnings are an illustration of what’s going on here: they didn’t pull a hamstring as the cyclical impulse to spend on compute is still clearly intact, but price action told a certain story (i.e. -$320 billion of market cap in one day). Bigger picture, the stock has been range bound for the past eight months — coming off a 24,000% cumulative return in the prior ten years, if nothing else that’s anti-climactic.”

John Flood:

“February’s notional de-grossing in US TMT [technology, media, and telecom] is tracking to be the second largest on our record (behind January 2021 amid the meme stocks rally). Net exposure to Mag7 names has continued to fall and is now at the lowest level since April 2023, and aggregate long-short ratio across our US TMT AI basket constituents remains well below the highs seen around the middle of last year.”

Mark Wilson:

“To my starting comment about price action sometimes revealing more than fundamentals — these 3 ‘head check’ charts of the largest index constituents give a reasonable frame of reference for price possibilities from here: Nvidia, Apple & Amazon’s EV to 12-month trailing sales multiple: it’s not a uniform observation (i.e. AMZN has no dramatically re-rated), but its not unreasonable to suggest some very large stocks may consolidate after the moves they’ve had, in price & in multiple re-rating.”

More Markets

See all Markets

Nate Becker & Matt Phillips2h

Oil drops, yields fall, and stocks rise on reports the US has sent Iran a plan to end war

Oil, stock, and bond markets flipped as investors continued to digest the latest reports on a potential wind-down of the war in Iran, with The New York Times reporting that the US has sent Iran a 15-point plan to end the conflict.

Crude oil futures dropped sharply, from around $92 a barrel to about $88.50. Yields on two-year and 10-year Treasurys dropped, and the SPDR S&P 500 ETF shot up after-hours.

From the Times:

“The United States has sent Iran a 15-point plan to end the war in the Middle East, according to two officials briefed on the diplomacy, reflecting the Trump administration’s eagerness to find an offramp from the conflict as it grapples with its economic fallout.

It was unclear how widely the plan, delivered by way of Pakistan, had been shared among Iranian officials and whether Iran was likely to accept it as a basis for negotiations. Nor was it clear whether Israel, which has been bombing Iran together with the United States, was on board with the proposal.

But the delivery of the plan showed that the administration was ramping up efforts to conclude a war, now in its fourth week, that has drawn in several other countries.”

Some individual shares had outsized reactions to the news in the postmarket session. Gold miners Freeport-McMoRan and Newmont, which have been battered since the war started, rose. Ammonia maker CF Industries — which had risen on expectations of rising prices for fertilizer products linked to the closure of the Strait of Hormuz — fell.

US natural gas producers such as APA Corporation, EOG Resources, Devon Energy, and Diamondback Energy also declined after-hours.

The Times report also said that “for now, there is no indication that the war will let up imminently.”

United States Said to Have Sent Iran a Plan to End the Middle East War

Crude oil futures dropped sharply, from around $92 a barrel to about $88.50. Yields on two-year and 10-year Treasurys dropped, and the SPDR S&P 500 ETF shot up after-hours.

From the Times:

“The United States has sent Iran a 15-point plan to end the war in the Middle East, according to two officials briefed on the diplomacy, reflecting the Trump administration’s eagerness to find an offramp from the conflict as it grapples with its economic fallout.

It was unclear how widely the plan, delivered by way of Pakistan, had been shared among Iranian officials and whether Iran was likely to accept it as a basis for negotiations. Nor was it clear whether Israel, which has been bombing Iran together with the United States, was on board with the proposal.

But the delivery of the plan showed that the administration was ramping up efforts to conclude a war, now in its fourth week, that has drawn in several other countries.”

US natural gas producers such as APA Corporation, EOG Resources, Devon Energy, and Diamondback Energy also declined after-hours.

The Times report also said that “for now, there is no indication that the war will let up imminently.”

GameStop seesaws on Q4 results

The video game and collectibles retailer just reported Q4 results.

Luke Kawa, Max Knoblauch3h

Tasha Matsumoto

Stocks close lower after fluctuating as traders digest war updates

Stocks pared steeper losses on hopes of US-Iran talks, but were unable to maintain gains on reports that the US is deploying 3,000 troops to the Middle East.

Matt Phillips4h

Amid Mideast conflict, investors cling to faith in the AI build-out

Data center build-out stocks showed impressive resilience to the slump that hit big indexes Tuesday.

In fact, construction companies, server system makers, fiber-optic technology stocks, and memory makers — all cornerstones of the AI trade — were having a pretty good day, suggesting the market sees the wave of AI construction continuing, war or no war.

Optical stocks seen as crucial to efficiently transmitting the flood of information AI data centers both produce and depend on were surging. Corning, Lumentum, Coherent, and Ciena Corp. ramped.

Server rack makers HP Enterprise and Dell jumped. Construction and engineering companies like Sterling Infrastructure, MasTec, and Comfort Systems USA, which have benefited from the growth in building data centers, posted solid gains.

Hard disk drive makers Seagate Technology Holdings and Western Digital were also positive, though other memory plays such as Sandisk and Micron were in the red.

It was an impressive display of positivity on a day when the S&P 500 (SPDR S&P 500 ETF) and the Nasdaq 100 (Invesco QQQ Trust) were both fluttering between positive and negative territory for completely understandable reasons.

After all, the 82nd Airborne is heading to the Middle East, suggesting the US is considering sending troops into Iran. US crude oil is back above $90 a barrel and climbing, as the Strait of Hormuz remains essentially shut.

Additionally, the problems in the private credit market continue, with major fund managers preventing investors from withdrawing all the money they would like to. We even had a weak auction for US two-year Treasury notes — investors seemed to think the offered yield might not be sufficient to offset inflation risks stirred up by the war — that sent short-term interest rates up sharply.

But apparently it will take more than all that for investors to worry that the AI build-out may be halted, delayed, or even just trimmed back.

Nate Becker8h

Stocks get a bump on CNN report that Iran is willing to listen to proposals to end war

Stocks got a small bump midday Tuesday as CNN reported on what appeared to be a softening in Iran’s position toward ending the war in the Middle East.

The S&P 500 briefly turned green following the report, before paring some of those gains in the afternoon.

From the CNN report:

“An Iranian source told CNN on Tuesday that there had been ‘outreach’ between the United States and Tehran and that Iran is willing to listen to ‘sustainable’ proposals to end the war.

‘There has been outreach between the United States and Iran, initiated by Washington, in recent days, but nothing that has reached the level of full-on negotiations,’ the source said. ‘Messages have been received through various intermediaries to scope out whether an agreement to end the war can be reached.’”

Markets had zoomed Monday as President Trump said there had been discussions between the two nations, but they gave back some of their gains after Iran starkly denied the claim. Markets seemed to read this new reporting as a softening of Iran’s position.

Iranian source says there has been US "outreach" and Tehran "willing to listen"

“An Iranian source told CNN on Tuesday that there had been ‘outreach’ between the United States and Tehran and that Iran is willing to listen to ‘sustainable’ proposals to end the war.

‘There has been outreach between the United States and Iran, initiated by Washington, in recent days, but nothing that has reached the level of full-on negotiations,’ the source said. ‘Messages have been received through various intermediaries to scope out whether an agreement to end the war can be reached.’”

Latest Stories

Sherwood Media, LLC produces fresh and unique perspectives on topical financial news and is a fully owned subsidiary of Robinhood Markets, Inc., and any views expressed here do not necessarily reflect the views of any other Robinhood affiliate, including Robinhood Markets, Inc., Robinhood Financial LLC, Robinhood Securities, LLC, Robinhood Crypto, LLC, Robinhood Derivatives, LLC, or Robinhood Money, LLC. Futures and event contracts are offered through Robinhood Derivatives, LLC.