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Russian (RU) The premiums afforded once untouchable "Magnificent Seven" stocks continue to evaporate as Trump tariff concerns pound global markets.
Price-to-earnings ratios — which measure how much an investor is willing to pay for the company's future earnings — for the Magnificent Seven have plunged across the board, according to new data from Creative Planning chief markets strategist Charlie Bilello (see chart below). The Magnificent Seven includes Alphabet (GOOGL), Amazon (AMZN), Apple (AAPL), Meta (META), Microsoft (MSFT), Nvidia (NVDA), and Tesla (TSLA).
The most significant multiple compression has come from Tesla, Nvidia, and Apple — three companies stuck in the crosshairs of Trump's bruising new trade policies. Apple shares alone have shed 13% in the past five trading sessions, or about $368 billion in market cap.
Experts say that the P/E pullbacks reflect uncertainty about what future earnings will be for even the formidable Magnificent Seven, which are often heralded for their wide-moat business models and impressive cash piles.
"What is the E [earnings]? No one knows in this economic chaos policy," Wedbush tech analyst Dan Ives told Yahoo Finance about the Magnificent Seven valuations.
The market is trying to figure out fair value but is crying out loud in the process.
Heavy selling continued in markets around the world on Monday.
Tokyo's Nikkei 225 (^N225) index tanked 7.8%. Hong Kong's stock market (^HSI) nosedived about 12%, the worst day in more than 16 years. China's Shanghai Composite Index (000001.SS) lost 8.4%.
Futures on the Dow Jones Industrial Average (^DJI) dropped more than 1,100 points at one point. S&P 500 (^GSPC) and Nasdaq Composite (^IXIC) futures were each down about 3.5%.
Markets have shed an astounding $5.4 trillion in value in the two days since President Trump revealed big-time tariffs on major companies. The S&P 500 is now at its lowest level in 11 months.
Read more: How to protect your money during economic turmoil, stock market volatility
The impact of tariffs on Magnificent Seven players may be sizable.
Amazon could see a $5 billion to $10 billion annualized operating profit hit from higher first-party merchandise costs due to tariffs, Goldman Sachs tech analyst Eric Sheridan warned in a new note.
Assuming no mitigating factors such as cost cuts or vendor negotiations, Sheridan estimated that Amazon's US merchandise costs would soar by 15% to 20%.
"We don't think this [selling] was it yet though. Last week's tariff announcement has dialed up uncertainty even further," HSBC strategist Charlotte Parker said on Monday.
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