Tesla (TSLA) cratered 14.3% on Thursday, erasing $152 billion in market value, as CEO Elon Musk and President Donald Trump’s bromance imploded in real-time on X.
Musk’s barrage against Trump’s tax bill, dubbed a “disgusting abomination,” clashed with Trump’s threats to nix Musk’s government contracts, including SpaceX’s $4.46 billion NASA deal. Musk’s claim that he single-handedly secured Trump’s election victory – met with Trump’s retort that Musk “went CRAZY” over EV credit cuts – tanked TSLA below the $1 trillion market cap at $916 billion.
The feud amplified Tesla’s woes: First-quarter sales fell 13%, and consumer boycotts tied to Musk’s politics persist. Premarket Friday, TSLA rebounded 4.1% after reports of a White House-brokered Musk-Trump phone call aimed at détente, signaling potential de-escalation. Traders eye whether this calms volatility or if tariffs and protests reignite pressure.
Not every Magnificent 7 stock melted down yesterday. Microsoft (MSFT) soared to a new all-time high of $469.65 on Thursday, up 24% year-to-date, cementing its $3.5 trillion market cap as the world’s second-largest behind Nvidia (NVDA).
The rally stems from MSFT’s AI dominance, with Azure cloud revenue surging 21% in fiscal third-quarter results and topping expectations, driven by OpenAI integrations and Copilot adoption across 60% of Fortune 500 firms.
Capital expenditures continued growing at a hefty rate, up 53% to $16.75 billion, but CEO Satya Nadella said MSFT plans to spend $80 billion in FY25 on building AI data centers. It positions Microsoft to capture the $1.6 trillion AI market by 2030.
At a 32x forward P/E, MSFT trades above the S&P 500’s 22x and risks include regulatory scrutiny over OpenAI ties and tariff-driven cost hikes. Those data centers will require a lot of technology from international markets, although MSFT’s 85% gross margins absorb shocks. Wall Street is fully on board with MSFT, as 92% of the 61 analysts following the tech giant rating it a buy with a consensus one-year price target of $509 per share, implying 8.8% upside.
Verdict: Hold. MSFT’s AI tailwinds justify its premium, but stretched valuations and macro risks suggest waiting for a dip to buy. Profit-taking is premature given secular growth, but scale back if tariffs escalate.
Meta Platforms (META) and Nvidia are well-positioned to draft behind Microsoft’s AI-driven breakout, potentially allowing the fellow Mag 7 stocks to also hit new all-time highs.
META stock, at $684 per share, up 17% year-to-date, leverages AI in ad personalization, with first-quarter ad revenue up 16% to $41 billion. Its $1.7 trillion market cap and 24x forward P/E offer a little more value compared to MSFT, though a $713 per share analyst price target implies just 4% upside, but a new all-time high.
Nvidia, at $140, up just 4% year-to-date, but up 21% over the past year, remains the AI chip leader. First-quarter results continued to impress with 69% year-over-year revenue growth though NVDA expects to take an $8 billion hit this year due to export controls on technology.
Nvidia's $3.4 trillion cap and 24x P/E aren't as frothy as one would expect, but a $172 target (23% upside) suggests there is room to run.
Both benefit from MSFT’s AI infrastructure spend, as Meta uses Nvidia’s GPUs and MSFT’s cloud. Risks include tariff impacts on Nvidia’s supply chain and Meta’s regulatory headwinds. Still, their AI exposure and relative valuations make them candidates to follow MSFT’s lead, with Nvidia offering better value for new highs.
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