According to Woofun AI, as recent rebound momentum faded and the earnings season approached, the seven strongest technology stocks in the market suffered a collective pullback over the past two weeks.
The Roundhill Magnificent Seven ETF (MAGS.US) closed the week at $70.07, down nearly 7% from its high for the year.
This retreat accelerated after Meta (META.US) and Tesla (TSLA.US) reported results, with Meta (META.US) falling 18% from its yearly peak as quarterly free cash flow turned negative, while Tesla (TSLA.US) came under pressure from declining revenue in its electric vehicle and energy businesses, though growth in its services and other segments partly offset the decline.
Data compiled by Woofun AI shows Microsoft (MSFT.US) ended last week at $524, slightly below this month's higher level of $550 but still 50% above its low for the year.
Analysts expect Microsoft (MSFT.US) revenue to rise 17% year over year to $90 billion, with earnings per share climbing from $4.13 to $4.72.
Share price movement, however, will depend more on how investors assess artificial intelligence capital spending and returns, particularly the performance of the Copilot product.
Microsoft (MSFT.US) previously disclosed that its AI-related spending plans for 2026 fall between $175 billion and $190 billion.
Meanwhile, Alphabet (GOOGL.US) shares have dropped to $317, a sharp 22% decline from their yearly high of $402.
The market expects its revenue to grow 25% to $127 billion, with earnings per share of $2.97.
The performance of its advertising business, a primary revenue source, along with free cash flow under sustained AI investment, will be key variables for the stock.
Alphabet (GOOGL.US) reported negative free cash flow of $5.85 billion in the second quarter, and management guided 2026 AI spending to between $195 billion and $205 billion.
In addition, BNP Paribas forecasts that its TPU (tensor processing unit) business revenue will reach $40 billion in 2027, and the growth potential of this segment will become clearer in this week's earnings report.
Amazon (AMZN.US) shares have also seen a significant pullback, sliding from $287 in August to the current $248.
Analysts expect its revenue to grow 12.2% to $202 billion, with the AWS business as the core driver.
However, the deteriorating trend in free cash flow has raised market concerns, as Amazon (AMZN.US) free cash flow turned negative in the second quarter, and this negative trend may continue as AI investment increases.
Amazon (AMZN.US) is expected to spend $220 billion on AI in 2026, above the previously reported $200 billion.
Structurally, the massive capital expenditures of these three technology giants on AI infrastructure are reshaping their financial models, with temporary pressure on free cash flow becoming a common feature.
The AI spending expectations for Microsoft (MSFT.US), Alphabet (GOOGL.US) and Amazon (AMZN.US) fall in the ranges of $175 billion to $190 billion, $195 billion to $205 billion and $220 billion, respectively, showing the industry's extreme emphasis on the computing power race.
This shift from pursuing short-term profits to long-term infrastructure investment, while suppressing share price performance in the short term, also lays the foundation for future technological barriers.
It is worth noting that investors' focus on earnings has shifted from simple revenue growth to a deeper assessment of capital efficiency and the commercialization of AI.
This is another stress test of the high capital expenditure model following the previous round of technology stock valuation restructuring, and future moves will depend on whether these giants can prove that their AI investments can translate into sustainable profit growth.
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