In 2025, tech stocks continued their strong performance, placing second among the S&P 500’s 11 sectors, though major players in the Magnificent Seven saw mixed results. Apple (NASDAQ: AAPL) recorded less than a 12% gain, trailing the S&P 500’s overall growth of 17.49%. Microsoft (NASDAQ: MSFT), Meta Platforms (NASDAQ: META), and Amazon (NASDAQ: AMZN) posted gains of 16%, 10%, and less than 5%, respectively.
While three companies—Tesla (NASDAQ: TSLA), NVIDIA (NASDAQ: NVDA), and Alphabet (NASDAQ: GOOGL)—outperformed the S&P 500 with gains of nearly 21%, 36%, and 66%, the laggards faced challenges from high valuations and heavy investments in AI. For instance, Amazon’s significant $125 billion spending on AI infrastructure in 2025, which included a $10 billion project in North Carolina, adversely affected its cash flow, dropping from $3.6 billion in Q4 2024 to -$12.4 billion in Q1 2025.
Looking ahead to 2026, analysts are optimistic, with 58 of 61 covering Amazon assigning it a Buy rating, reflecting an average 12-month price target suggesting a 27.43% potential upside. Similarly, Microsoft also has positive momentum, anticipating up to $25 billion in additional revenue from AI cloud adoption by FY 2026, supported by a Buy rating from 39 out of 43 analysts covering its stock.
