Five of the Magnificent Seven have lost a combined $3.54 trillion from their respective peaks, with Google alone shedding $1.54 trillion, or more than 40% of the total. This is no longer an ordinary pullback; it looks more like the market is repricing these companies. Even with the same AI narrative, some have advertising, cloud businesses, and cash flow to support them, while others are still trading capital spending for growth, so their valuation multiples are naturally diverging. Google shedding $1.54 trillion also shows that the market is reassessing the moat around search advertising and the payback period for AI investment.

Over the past two years, Big Tech valuations soared on AI expectations, and all you had to do was stay invested to make money. Now the market is starting to separate the winners from the losers, and even small differences in capital spending, free cash flow, and ad growth in earnings reports are being magnified. In the past, you could buy Big Tech with your eyes closed and sit back to earn beta. Now you have to keep your eyes open and choose the companies, prices, and timing carefully.

After doing this for so long, I’m increasingly convinced that position sizing is always more important than calling the direction of the market. If you get the direction wrong, you can still survive with the right position size; if your position gets out of control, one drawdown could knock you out. For example, even if two people have the same long-term bullish view on tech stocks, one might go all in on a single name and be forced to cut their position after a 30% drawdown. Another might buy in stages, keep cash on hand, and set a cap for any single position—and end up able to wait for better prices amid the volatility. For ordinary investors, that’s more practical than guessing the next candlestick.

Is this wave about bursting a bubble, or a genuine trend reversal? It’s too early to say. Let’s see how things look over the weekend and compare notes then.