Short sellers reap record profits betting against big tech stocks.

Traders who took a bearish stance against the “Magnificent 7” group of major U.S. tech stocks celebrated their largest weekly profit to date, exceeding $10 billion in gains, according to Ortex data. Their success was particularly pronounced in short positions against Nvidia and Tesla, which experienced significant declines last week.

Nvidia, the chip designer, witnessed a staggering 14% drop, marking its most substantial weekly decline in over 19 months and resulting in short sellers pocketing over $3 billion in profit. Similarly, Tesla, which has underperformed compared to its peers in the tech elite, also plummeted by nearly the same margin, generating $3 billion in profits for short sellers.

The collective downturn among the “Magnificent 7” contributed to a staggering loss of close to $1 trillion in market capitalization last week, as reported by LSEG data. As attention turns to quarterly earnings reports, Tesla, Meta Platforms, Alphabet, and Microsoft are set to be under scrutiny.

The market’s sentiment is influenced by various factors, including weak iPhone sales data, subpar delivery numbers from Tesla, and regulatory challenges in the EU and the USA. Additionally, investor sentiment regarding the direction of interest rates plays a significant role in shaping market dynamics, according to AJ Bell investment director Russ Mould.

With quarterly reports on the horizon, investors eagerly anticipate insights from these tech giants, seeking reassurance amid market turbulence and shifting regulatory landscapes. As the week unfolds, all eyes will be on these companies as they provide updates on their performance and outlook for the future.