Amazon stock has entered a bear market phase. Which Magnificent 7 is next in line?

Amazon became the second company from the "Magnificent Seven" after Microsoft, whose shares were in the zone of prolonged decline. After eight consecutive days of decline, the retailer's shares have entered the "bear market" phase: the drop in quotes from recent highs exceeded 20%. Meta Platforms is at risk of becoming the next one, MarketWatch states.

Before the transition to the "bearish" phase, Meta's shares have only 2.3% to fall, MarketWatch writes, citing Dow Jones data. Although the company's revenue and profit for the last quarter exceeded Wall Street's expectations, investor sentiment has deteriorated due to rising costs for artificial intelligence and pressure on margins, the publication notes.

The recent selloff underscores a growing rift among the members of the "Magnificent Seven," Mike Tracy, vice president of risk at Apex Fintech Solutions, told MarketWatch. Quotes for Amazon, Microsoft and Meta are suffering as the market loses confidence in these companies' ability to deliver sufficient return on investment (ROI) from AI investments, he said.

Investors have begun to shift to the Alphabet and Broadcom tandem, Tracy notes. "I think Google's self-sufficiency should provide a premium [in valuation] relative to other players that could be hurt by a failure in one link in the chain," Tracy said, referring to the AI processors Google is developing in partnership with Broadcom.

This week analysts of several financial organizations raised target prices on Meta Platforms shares, confirming recommendations to buy its securities: DBS Bank raised the benchmark from $913 to $1000, BNP Paribas - from $800 to $850, Arete Research - from $718 to $732, reports MarketScreener. According to FactSet, the consensus rating of Meta's securities for the last three months is kept at the level of "buy" (Buy) with a complete absence of recommendations to sell.

Bank of America analysts led by Michael Hartnett see a fundamental threat to the leadership of the "Magnificent Seven" in the changing nature of the IT business: the forced rejection of a model based on scaling software with minimal capex in favor of creating capital-intensive infrastructure for AI deprives the tech giants of their former investment exclusivity. In the run-up to the US midterm elections, Hartnett's team proposes a "buy Main Street, sell Wall Street" strategy, advising investors to move into small and mid-cap companies and bet on the real sector (Main Street).

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