Magnificent Meltdown: QQQ Tanks As Big Tech's Shine Wears Off, But There's A Silver Lining

Invesco QQQ Trust QQQ, considered a proxy for large-cap growth and tech-dense innovation, faltered considerably in 2025.

What Happened: The ETF has had year-to-date losses of 13.44%. While alarming on its own, this number conceals more profound undercurrents within its underlying makeup, most notably the fortunes of “Magnificent Seven” stocks, which collectively comprise more than 40% of the QQQ.

The decline among these mega-cap growth stars has been swift and, by some accounts, historic. Roundhill Magnificent Seven ETF MAGS mirrors this group of stocks and is down over 12% for the past six months.

As investment advisory company Bespoke Investment Group recently noted, there is more downside risk.

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A convergence of global macroeconomic headwinds has helped to bring about this weakness. J.P. Morgan Asset Management underscores that around 75% of the suppliers to these companies are overseas, many in jurisdictions that are newly subject to fresh tariffs under new U.S. trade policy.

Adding to the squeeze, corporate behemoths and Mag7 members such as Alphabet GOOGL, Apple AAPL, and Microsoft MSFT get more than half of their revenues abroad. Consequently, rising trade tensions and supply chain risks continue to be primary risk considerations for investors assessing exposure to QQQ or its underlying tech giants.

Why It Matters: A wider view presents a more complex picture. According to J.P. Morgan’s Stephanie Aliaga, the recent decline has not been caused by a deterioration in underlying fundamentals.

Instead, it is a repricing of risk in the face of heightened uncertainty regarding margins, capital spending, and earnings expectations. This has resulted in significant compression in valuation.

Importantly, the forward price-to-earnings (P/E) multiple for the Magnificent Seven has fallen from around 31x early in the year to about 22x—its lowest price since January 2023, before the then-ongoing artificial intelligence (AI) cycle of investment.

This relative discount may attract long-term investors looking for quality at a better entry point. These companies are at the core of the QQQ portfolio and leading in innovation, especially in AI and cloud computing. Their impact on the overall market, and the QQQ, is still unbroken.

However, near-term prudence is likely to be justified. Trade headwinds are not likely to subside quickly, and more volatility in mega-cap growth can be expected. But for those with the stomach for short-term dislocations, the combination of cheap valuations and continued innovation leadership presents an attractive argument for revisiting QQQ and its Mag 7 exposure.

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