On February 26,2025,Wall Street found itself grappling with a pronounced drop in technology stocks,casting a shadow over the exuberant two-year rally.The atmosphere turned particularly tense when Tesla's stock sank below the critical threshold of a $1 trillion market capitalization.Since the beginning of 2023,tech giants,often collectively referred to as the "Magnificent Seven",had propelled the S&P 500 index to a remarkable increase of 38%.However,the turbulence observed at the commencement of 2025 made investors reconsider the sustainability of this booming market.

On February 25,the Magnificent Seven index,tracked by Bloomberg,closed at 13,247 points,reflecting a 12.3% retreat from its historical high point in December of the previous year,with the loss in market value equating to the total capital of the German DAX index.Leading this tumultuous adjustment was Tesla,which suffered a staggering year-to-date drop of 25.8%.Its market cap declined by a whopping $3.8 trillion from its peak in November 2024,an amount corresponding to the entire market value of Toyota.Paradoxically,during the same timeframe,Meta Platforms achieved a historic milestone with the S&P 500,registering its longest series of consecutive daily gains—20 trading sessions—propelling its valuation by $322 billion.This figure astonishingly parallels the daily valuation increase of ExxonMobil.

Such stark differentiation underscores a significant transformation within the tech industry.Tesla's downturn can be attributed to a confluence of crises: in the European market,it faced fierce competition from domestic automakers,leading to a 45% drop in January sales; in China,competitors like Nio and Xpeng intensified the fight for high-end market share; and in North America,policy shifts took their toll.On the flip side,Meta's resurgence derives from a successful pivot towards artificial intelligence; its AI-driven social platform,Threads,saw user numbers soar past 1.2 billion,while advertising revenue growth surged back into double digits.This revitalization has resulted in a dramatic increase in the company's valuation multiple from 15 times in 2024 to the current rate of 28 times.

As the market volatility deepens,the valuation logic applied to technology stocks is undergoing a reassessment.By the end of February,the average dynamic price-to-earnings ratio for these seven tech giants reached a staggering 35 times,significantly outstripping the S&P 500's ratio of 18 times.This premium was built on an unshakeable belief in the limitless potential of the AI technology revolution.Yet,the practical implementation of enterprise-level AI applications has far lagged behind expectations.According to the latest McKinsey research,only 19% of surveyed companies reported a substantial increase in revenue due to AI,while a daunting 47% indicated an overrun in development costs.

Compounding this worrying trend is the deteriorating structure of capital expenditure within the tech sector.In 2024,the combined R&D spending of the seven giants hit $185 billion,with 73% funneled into AI.Yet,the free cash flow for these companies witnessed a year-over-year decline of 12%.This "burning cash for growth" strategy has sparked mounting concerns among investors.Bank of America’s capital flow report reveals that,since the onset of 2025,there has been a net outflow of $23.7 billion from tech stock ETFs,the highest since March 2020.

The turbulence in tech stocks also reflects broader geopolitical economic dynamics.With the full implementation of the EU’s Digital Markets Act,companies like Google and Microsoft now face potential fines of up to 10% of their global revenue.At the same time,the U.S.Department of Commerce has ramped up its export restrictions on AI chips to China,resulting in a staggering 68% decrease in the supply of Nvidia's A100 chips to the Chinese market.Such shifts in policy are redefining the global tech landscape.

An illustrative case of these challenges is the predicament at Tesla's Berlin factory.Despite increasing production capacity by 15% through the acquisition of Manz,the German government slashed production subsidies by 40%,citing "excess carbon emissions." In parallel,Contemporary Amperex Technology Co.,Ltd in Hungary has begun mass production,offering battery costs that are 22% lower than those at Tesla’s Berlin facility.This policy shift is accelerating the restructuring of the European electric vehicle supply chain,resulting in Tesla’s market share plummeting from 21% in 2023 to just 15%.

Amidst these adjustments in U.S.tech stocks,international capital is re-strategizing its allocations.Since the start of 2025,the MSCI Emerging Markets Index has surged by 8.7%,while the S&P 500 has only managed a 1.9% rise.BlackRock's latest global asset allocation report underscores a potential end to the era of superior returns from U.S.technology stocks,highlighting an increased allocation towards European industrial technology and Asian semiconductor industries.

This pivot is particularly manifest in the mergers and acquisitions market.In the first quarter of 2025,global M&A activity within the tech sector fell by 34% compared to the previous year,yet Chinese acquisitions of European chip design companies skyrocketed by 210%.The CEO of ASM International,a German semiconductor equipment manufacturer,remarked,"We are witnessing an increasing number of Asian clients diversifying towards European supply chains,which may reshape the global semiconductor industry map."

As the turbulence in tech stocks entered its third week,market divisions became increasingly pronounced.Morgan Stanley's chief strategist,Wilson,opined that "current valuations have already factored in the worst-case scenarios,and the disruptive potential of AI has yet to be fully unleashed." In contrast,Ray Dalio,founder of Bridgewater Associates,cautioned that "the high valuations of tech stocks represent a significant mismatch with the reality of an economic slowdown,a disequilibrium that could trigger systemic risks."

With the U.S.Federal Reserve meeting set for March 2025,it stands as a pivotal moment in this long and ongoing tug-of-war between bulls and bears.The market anticipates that the Fed could initiate interest rate cuts as soon as June,but Silicon Valley Bank's data indicates that the default rate for credit among tech firms has surged to 2.1%,the highest level since 2009.Should a recession manifest sooner than anticipated,the valuation framework for tech stocks will endure even greater scrutiny.

Standing at the crossroads of 2025,the turning point for the bull market in U.S.tech stocks may not yet have arrived; however,the structural adjustments within the industry are unmistakably irreversible.As Meta leverages AI to reshape social media,Nvidia stakes its claim in the autonomous driving chip sector,and Tesla grapples with capacity anxiety,the tech industry is navigating through a phase characterized not merely by price fluctuations,but rather a transformative encompassing a struggle for global economic hegemony.The eventual outcome of this revolution will dictate the flow of global wealth over the next decade.