U.S. tech giants reached $20.8 trillion market cap, surpassing the EU’s $19.4 trillion GDP milestone

The Magnificent 7 collectively reached a combined market capitalization of $20.8 trillion, surpassing the EU’s GDP of $19.4 trillion.  

The GDP of the European Union stood at USD 19.42 trillion in 2024 and was expected to increase slightly to over USD 19.65 trillion in 2025. The European Commission revealed that the spring forecast projected real GDP growth in 2025 at 1.1% in the EU and 0.9% in the euro area, broadly the same rates attained in 2024

Magnificent 7 dominate global markets

Nvidia reported a market valuation of $4.3 trillion, $165.2 billion in trailing twelve-month revenue, and $115.4 billion in gross profit. 

Microsoft reported a market valuation of $3.85 trillion. In the fourth quarter of FY2025, Microsoft’s sales totalled $76.4 billion, representing an 18% increase over the previous year. Net income increased 24% to $27.2 billion, while operating income increased 23% to $34.3 billion. At $3.65, diluted earnings per share represented a 24% increase over the previous year.

As of October 2, Apple had a market value of $3.78 trillion, bolstered by $190.7 billion in gross profit and $408.6 billion in trailing twelve-month revenue, which yielded an annualized return of 17.52% over the past five years.

Google’s Alphabet had a market valuation of $2.95 trillion, $371.4 billion in revenue, and $218.9 billion in gross profit, yielding a five-year annualized return of 27.07%. Amazon had a market valuation of $2.34 trillion, $670.0 billion in revenue, and $332.4 billion in gross profit. Amazon has a 6.39% five-year return.

Meta also reported a market valuation of $1.84 trillion, $178.8 billion in revenue, and $146.5 billion in gross profit, yielding a five-year annualized return of 22.61%. As of October 2, Tesla’s market value stood at $1.48 trillion, bolstered by $16.2 billion in gross profit and $92.7 billion in trailing twelve-month revenue, with a five-year annualized return of 24.38%.

Global leaders warn as tech giants drive valuations beyond fundamentals

David Solomon, CEO of Goldman Sachs, warned on Friday at Italian Tech Week in Turin, that an AI investment frenzy may be overdone and that stock markets are due for a “drawdown.”

Solomon said major US stock indexes have notched record high after record high this year on the promise of artificial intelligence. He argued that there’s a good chance that not all of those investments will deliver big returns. He noted that the internet craze of the late 1990s and early 2000s drew a frenzy of investment in tech companies at the time. Solomon reminded the crowd that the internet craze was followed by a dramatic collapse, which is commonly known as the “dot-com bubble”.

Jeff Bezos referred to the AI investment wave as an “industrial bubble.” He also emphasized that innovation stemming from such AI investment cycles can still yield long-term advantages. According to Bezos, the market is seeking the next big breakthrough, reminiscent of the dynamics of previous bubbles. He added that the previous bubble dynamic is why many small AI ventures with weak foundations receive investment.

On October 3, Dario Perkins, TS Lombard’s Managing Director of Global Macro Research, raised an alarm when he noticed that big tech companies were increasingly using off-balance-sheet loans and special purpose entities (SPVs) to finance AI equipment. According to Perkins, this is a “recognition that this is getting out of hand.” Perkins emphasized that the real leverage and risk exposure of businesses like Meta, which has requested $29 billion in private finance for the expansion of its AI data centre, are concealed by such borrowing techniques.

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