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It's been a rough go for tech stocks so far in 2025. The Magnificent 7's stellar returns over the past two years fueled big gains in the broader S&P 500 index, but mounting worries that a global slowdown could crimp corporate budgets have been a headwind this year.
The S&P 500 has fallen 10% year-to-date in 2025, mainly because tech stocks, representing over 30% of the index, have tumbled. The pain has been widespread across tech-land, with large technology leaders like Nvidia and Meta Platforms being particularly hard hit, dropping 24% and 14%, respectively.
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The sell-off in technology stocks has caught the attention of global investors, including Stephen Yiu, who manages money for billionaire Peter Hargreaves, founder of U.K. financial services giant Hargreaves Lansdown.
Yiu's Blue Whale hedge fund is particularly dialed into technology, given that about 40% of the fund's roughly $1.5 billion in assets are invested in the sector.
The hedge fund's size and tech-stock focus make Yiu's moves, including his latest bets on what will happen to Nvidia and Meta Platforms stock next, worth watching.
Technology stocks' rally hits a roadblock
The technology industry has been a big beneficiary of a flood of investment into artificial intelligence.
After OpenAI's ChatGPT became the fastest app to reach one million users when it was launched in 2022, companies poured massive sums into developing their own large language model AI chatbots and agentic AI programs.
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The flurry of AI interest has correspondingly encouraged a staggering overhaul of enterprise and cloud network data centers.
Capital expenditures by hyperscalers like Amazon, Microsoft (MSFT) , and Google have skyrocketed, reaching $192 billion in 2024. Meta Platforms (META) alone spent $39 billion last year, up from 27 billion in 2023.
The buildout has been a boon for Nvidia, given that its graphics processing units (GPUs) are far better suited to handling the massive compute power required for training and running AI programs than the central processing units (CPUs) most commonly found in network servers.
Nvidia's (NVDA) revenue has surged since 2022 because of demand for its H100, H200, and Blackwell chips. It reached $130 billion in fiscal 2025, up an eye-watering 114% in 2024 alone.
Hyperscalers' spending on Nvidia chips has largely been financed by cloud customers' rising spending on AI research and strength in other business segments.