The financial outlook for the seven tech giants has improved, with Nvidia leading the way.

NVIDIA's Q3 performance exceeded expectations, alleviating market concerns about the enthusiasm for AI investments. The chip giant has become the biggest winner in the AI wave due to its monopoly position in the data center GPU market—Q3 profits rose 57.3% year-on-year, and revenue increased by 62.5%, with an expectation that full-year earnings could double by 2025.

However, the rise has been significant: NVDA has risen 35% this year, while the overall rise of the tech giants (Mag 7) is only 13.7%, basically in line with the S&P 500. Interestingly, the market's attitude towards AI concept stocks is clearly divided—Alphabet(GOOGL) is still in demand, but Meta(META) and several others are being overlooked.

From the perspective of profit expectations, the Mag 7's growth rate forecast for next year has risen from 12.2% two weeks ago to 15.4%. This year's Q3 collective profit increased by 17.3%, and revenue increased by 8.3%. However, the growth rate is slowing down: the expected growth for 2026 is 14.6%, and for 2027 it is 16.8%. This reflects that the period of AI infrastructure construction is coming to an end, and future growth will be more rational.

There is a striking data point: Mag 7 will contribute 26% of the total profits of the S&P 500 in 2026, compared to only 23.2% in 2024 and just 11.7% in 2019. These tech stocks are indeed supporting half of the U.S. stock market.

Overall, 94.8% of the S&P 500's third-quarter earnings reports have been released, showing a profit rise of 15.6% and a revenue increase of 8.3%, with 83.4% of companies exceeding expectations—this is a decent performance. But the key question is: have these high valuations already absorbed this profit rise? Only with continued valuation correction can stock prices take off.