Big Tech earnings have delivered a bifurcated view on the most coveted stocks globally. With mixed results on nearly all the Magnificent 7 (except Nvidia that’s yet to report) being digested, now might be the time to hedge against profit taking. I want to use the parabolic move in Meta to serve as an overall hedge against the most beloved technology stocks potentially moving lower. Not to mention, the stock is currently on an almost unheard-of 15-day winning streak. The onetime bulletproof group of stocks, called the Mag 7, for the first time in over two years look shaky. The tech giants are vastly profitable and responsible for the bulk of the excessive AI spending. However, last week’s DeepSeek open-source AI model news may soon call into question all their CapEx spend on AI. Investors already appear to be concerned with Google, Amazon, and Microsoft on the risk of over-spending on AI while Meta’s robust over-spend is still curiously celebrated. Because the continued consensus view that AI spend is optimistic and the fact that “AI” has now been brought up in over 50% of the S & P 500 earnings calls, I have apprehension that AI euphoria is here. Chinese AI firm DeepSeek has emerged as a potential challenger to domestic AI companies, demonstrating breakthrough models that claim to offer performance comparable to leading offerings at a fraction of the cost. Markets are still questioning the legitimacy of DeepSeek’s claims of building their model for only 2% of the actual cost that either META or Microsoft have spent, but sidestepping this may prove to be a misstep for tech investors. META 5Y mountain Meta, 5 years Meta is up nearly 500% since January 2023. Credit Mark Zuckerberg for his adaptability along the way. Buying short term puts on Meta is not an inexpensive approach, but if Zuckerberg’s AI bets reveal to be excessive, the stock will come back down to earth or at least its 50-day moving average down at $621. Also, Meta investors await the landing of the much-loved Chinese company TikTok which is impactful for those sought-after advertising dollar spend. The Trade Bought the 2/21/2025 $700 put for $7.00 Stocks was roughly trading $722 This put costs $700 per one put option DISCLOSURES: Long Meta, long these puts) All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
