Investors Go Old School – Selling Off the Magnificent 7 and Technology for Caterpillar and Chevron.

Investors Go Old School – Selling Off the Magnificent 7 and Technology for Caterpillar and Chevron.
 
The Dow Jones Industrial Average hit a new high of 50,512.79 on Feb. 10, 2026. However, some companies, including Wall Street’s 2025 love affair with the Magnificent 7 and technology companies, have lost a great deal of value over the past two weeks. Microsoft is down -17%!
 
Why are investors selling off technology and leaning into old school companies, such as Caterpillar (up 36.31% year to date) and Chevron (up 20%)?
 
Email [email protected] if you’d like to receive updated Stock Report Cards on the Magnificent 7, the top-performing Dow Jones Industrial Average companies, and select SaaS technology companies, such as Salesforce.
 
Here are the Topics We’ll Cover in This Blog.
 
The Not So Magnificent 7?
Why Are Old School Companies, including Industrials and Financials, So Popular?
Chevron is Up 20%!
Why is Salesforce on the Sell List?
 
 And here is more information on each topic.
 
The Not So Magnificent 7?
AI has been the surprise story of the last few years, with Nvidia soaring to $4.44 trillion in market cap. All of the Magnificent 7 companies lead in artificial intelligence, most have a strong foothold in cybersecurity, and many have diversified revenue streams with solid, year-over-year revenue growth and impressive profit margins. So why are these companies being sold off?
 

There are two main reasons why investors are selling the Magnificent 7. There are concerns about the amount of money that these companies are spending on artificial intelligence, without a pathway to profitability. As one example, Google just issued a Century bond that pays investors back in 100 years to help cover their investments in AI.

Additionally, the stock prices are just too high. When price-earnings ratios are elevated, volatility increases. Tesla’s net profit for 2025 was just $3.79 billion – far beneath the $15 billion the company earned in 2023. Yet the company is worth $1.57 trillion. It’s hard to justify that valuation, a price-earnings ratio of 388, at any time, and particularly when the 4Q 2025 revenue dropped -3.4% and profit margins continue to be squeezed by the EV price wars. Sophisticated Wall Street whales are capturing gains and rolling into other areas where they aim to also capture gains – all at the expense of the Main Street investor who often chases headlines.

In other words, the sell-off is not an abandonment of artificial intelligence. It’s a sober and disciplinary “capture gains” trade to take advantage of elevated valuations, and to signal to the technology companies that their high valuations demand profits, in addition to investments in AI.
 
Does this mean you should exit large cap growth or your hot slice of technology? Not really. Which one of us is ready to give up our smart phone, or to stop searching on Google? How many of us have already incorporated AI into our work routine? However, it is a reminder that we want to capture gains at least once a year.
 
If you haven’t captured gains on your large cap growth or your technology hot slices recently, now is a great time to do that. If you didn’t have either of these sectors over the last three years, then your portfolio has been underperforming the market, as the Magnificent 7 has been the driver of the gains on Wall Street. According to Howard Silverblatt, the former senior index analyst of the S&P 500, “For the three-year period, the Magnificent 7 contributed 55% of the total return, meaning the 86% (23.0% annualized) total return becomes 39% (11.6% annualized).”
 
Why Are Old School Companies, including Industrials and Financials So Popular?
Caterpillar’s share price is up 35% year to date. The price earnings ratio is 40, which is outlandish for an industrial. The company is worth $362.53 billion yet had only $8.88 billion in net profit for 2025. That was lower than the past two years.
 
What a lot of investors who chase dividends are unaware of is that debt and leverage are heightened in last-century companies, including Caterpillar. Caterpillar has a good credit rating, at A (S&P Global). However, the debt equity ratio is alarmingly high, at 2.03.
 
Honeywell is up 24% year to date. Honeywell is another company with lower revenue and net profits in 2025, and elevated debt, with a 2.24 D/E. The company is in danger of getting a credit downgrade. S&P Global has Honeywell on a Negative Credit Watch, which could take the company down to BBB+ status, just above junk.
 
Because of excessive leverage, massive debt, slow growth, squeezed profit margins and flat or negative year-over-year revenue growth in the U.S. value sectors, we’ve been using value replacement funds. Honeywell pays a dividend, with a yield of 1.97%. Caterpillar’s yield is 0.78%. Meanwhile, Australia has a higher sovereign credit rating than the U.S. (less risk) with a higher income and yield. The iShares Australian ETF (EWA) offers a current yield of 3.04%. Our mid Value replacement fund was Peru, which more than doubled in share price in 2025, while offering income (yield of 1.37% currently).
 
Chevron is Up 20%!
Oil prices are down and are expected to go even lower. Fitch Ratings is projecting that the price of oil per barrel will drop in 2026 from an average $67/barrel last year to $63/barrel. However, investors have pushed up the share price of Chevron by 20% in 2026. This is another play for income. Chevron increased their dividend to attract more buyers and is now offering a yield of 3.88%. While this sounds better than normal (3.5%), as equity, the small amount of income could come with loss of principal if the share price falls again.
 
Why would Chevron’s share price fall? Lower oil prices mean less revenue – something that many analysts are predicting for 2026. Over the past few years as oil prices dropped from $121/barrel in June of 2022 to $62.80/barrel (2.15.2026), Chevron’s revenue and net profit margins have plunged. Chevron’s 2025 net profit was $12.3 billion — a 5-year low, compared to $17.66 billion (2024), $21.37 billion (2023), $35.47 billion (2022) and $15.63 billion in 2021. (Chevron lost -$5.54 billion in 2020.) As electric vehicles become ever more popular, particularly in China the largest market for EVs, demand for oil has dropped. While this year’s Chevron share price rally seems spectacular, the price is really just back to where it was in October 2022.
 

Verizon is another DJIA 20th Century, high debt, flat growth, low profit margin company that is trading up 20.33% year to date but is still under the 5-year high. The Dow Jones Industrial Average has underperformied for the past three years, at 45%, while the total return of the S&P 500 was 88%.
 
In the short run, Wall Street can be a popularity contest with investors chasing ideas, like dividends. In the long run, companies are subject to the laws of supply and demand and profitability. While Chevron can turn a profit at $63/barrel, the margins are squeezed at just 6.21%. Raising the dividend compresses margins further, as does an increase in the price of steel, transportation and parts.
 
The only thing that looks attractive on the DJIA Winners Stock Report Card is the share price gain. It’s astonishing to see 40+ price earnings ratios for companies that have no growth. Walmart had $19.44 billion in net profit for 2025, yet the company’s market value is $1.07 trillion. Walmart’s price-earnings ratio is eyepopping for retail, at 47. Email [email protected] if you’d like to see the Stock Report Card for yourself.
 
Why is Salesforce on the Sell List?
The Wall Street whales are concerned about AI disrupting subscription-based technology products. They have hit the sell button hard on Salesforce, Workday, and Oracle, which are all down by half on their 5-year highs. I wouldn’t buy on the dip, however. Even with the profit taking and price plunge, these companies still have elevated price-earnings ratios. It’s a reminder that a little due diligence goes a long way, that buying high is never a good idea and that rebalancing to capture gains when we are in the money is a great strategy.
 
Bottom Line
In the Magnificent 7 selloff and touch correction of April 8, 2025, you could have purchased Nvidia stock for $95/share. Capturing gains at $183 is a great idea. Owning your Magnificent 7 in a fund to smooth out the volatility of owning just one company is also a smart move. (Have you done a complete analysis of your current wealth plan? Have you rebalanced your plan recently?)
 
As a result of all the profit taking in technology and the buying in industrials, financials and DJIA components, retail traders may look at their technical charts and try to chase those returns. A better strategy is always to have an age-appropriate, properly diversified plan that includes large, medium, small, value, and growth and four hot industries. I would base my decision on what’s hot from supply and demand dynamics rather than a chart telling me that everybody’s buying industrials. We’ve identified some excellent options for the hot slices in our Financial Freedom Retreats. A few of our picks doubled, with prospects for continued performance in 2026.
 
Remember that Wall Street adage: “Bulls make money, bears make money, pigs get slaughtered.” If your investment has shot the moon (silver investors pay attention!), it’s always a good idea to capture those gains and keep that money, while rebalancing towards that age-appropriate diversified plan. If you’re wondering exactly when to rebalance – it’s not a matter of market timing. It’s impossible to buy at the exact bottom or sell at the apex. When we look at our holdings objectively, next to a sample pie chart of an age-appropriate, properly diversified plan, it prompts us to stay on the right side of the trade and takes the emotions and guesswork out of it. You can read about this easy plan in my book, The ABCs of Money, 6th edition. You can learn and implement it by attending my ONLINE Spring Financial Freedom Retreat. I offer an unbiased 2nd opinion of your current wealth plan, including a blueprint of a time-proven strategy, through my private coaching. Email [email protected] for pricing and information.
 
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Natalie Wynne Pace is an Advocate for Sustainability Financial Literacy & Women's Empowerment. Natalie is the bestselling author of The ABCs of Money (6th edition) and The Power of 8 Billion: It's Up to Us, and is the co-creator of the Earth Gratitude Project. She has been ranked as a No. 1 stock picker, above over 835 A-list pundits, by an independent tracking agency (TipsTraders). Her book The ABCs of Money remained at or near the #1 Investing Basics e-book on Amazon for over 3 years (in its vertical), with over 120,000 downloads and a mean 5-star ranking. The 6th edition of The ABCs of Money and the 2nd edition of The ABCs of Money for College are the most recent releases of these books. Follow her on Instagram. 
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Natalie Pace's easy as a pie chart nest egg strategies earned gains in the last two recessions and have outperformed the bull markets in between. That is why her Investor Educational Retreats, books and private coaching are enthusiastically recommended by Nobel Prize winning economist Gary S. Becker, TD AMERITRADE chairman Joe Moglia, Kay Koplovitz and many Main Street investors who have transformed their lives using her Thrive Budget and investing strategies. Click to view a video testimonial from Nilo Bolden.​​

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Important Disclaimers
Please note: Natalie Pace does not act or operate like a broker. She reports on financial news, and is one of the most trusted sources of financial literacy, education and forensic analysis in the world. Natalie Pace educates and informs individual investors to give investors a competitive edge in their personal decision-making. Any publicly-traded companies, funds or projects mentioned by Natalie Pace are not intended to be buy or sell recommendations.

ALWAYS do your research and consult an experienced, reputable financial professional before buying or selling any security, and consider your long-term goals and strategies. Investors should NOT be all in on any asset class or individual stocks. Your retirement plan should reflect an age-appropriate, diversified wealth plan, which has been designed strategically, with the assistance of financial professionals who are familiar with your goals, risk tolerance, tax needs and more. The "trading" portion of your portfolio should be a very small part of your investment strategy, and the amount of money you invest into individual companies should never be greater than your experience, wisdom, knowledge, patience and diversified strategy.  
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Information has been obtained from sources believed to be reliable. However, NataliePace.com does not warrant its completeness or accuracy. Opinions constitute our judgment as of the date of this publication and are subject to change without notice. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument.