U.S. tech giants faced a staggering $1 trillion wipeout in market capitalization as trading opened on Monday, deepening a downturn that had already pushed the Nasdaq into correction territory. This market rout saw significant declines across the sector, with seven of the most valuable tech companies losing nearly $995 billion in the early moments of trading.
Key Players Hit Hard
Nvidia, a major beneficiary of the AI boom, saw its market cap shrink by more than $300 billion at the opening bell, although it later recovered approximately half of that loss. By the close, Nvidia’s shares were down 6.4%, reflecting a $168 billion loss in valuation. Apple and Amazon also faced substantial losses, with Apple’s market cap falling $224 billion and Amazon dropping $109 billion at market open. Apple ended the day down 4.8%, equating to a $162 billion loss, while Amazon’s market cap decreased by $72 billion after a 4.1% drop.
Broader Market Impact
The broader market experienced a significant downturn, exacerbated by concerns over a potential recession driven by recent disappointing economic data. The Nikkei 225 in Japan plummeted 12% on Monday, marking its worst day since the 1987 “Black Monday” crash. The cryptocurrency market was also hit hard, with Bitcoin diving 11%, leading to a broader sell-off in related stocks.
Tech Sector Declines
The tech sector’s struggles have been ongoing, with the Nasdaq falling 3.4% last week, culminating in its worst three-week performance in two years. Major players such as Meta, Microsoft, Alphabet, and Tesla also experienced steep declines. Wall Street had previously been optimistic about heavy investments in artificial intelligence (AI) from companies like Meta and Google, but recent reports have raised concerns about potential overinvestment in AI technology.
Nvidia and AI Concerns
Nvidia, which had seen remarkable growth due to its GPUs driving the AI boom, briefly surpassed $3 trillion in market cap earlier this year. However, its current valuation now sits below $2.5 trillion. Analysts have raised alarms about the possibility of an AI investment bubble, with Goldman Sachs noting that significant expenditures by major companies have yet to yield substantial results. Elliott Management has also criticized the AI frenzy as “overhyped.”
Upcoming Earnings Reports
Nvidia is set to report its earnings later this month. Despite recent market volatility, the company has posted revenue growth exceeding 200% for the past three quarters, highlighting the ongoing impact of its AI-driven success.
I am Aparna Sahu
Investment Specialist and Financial Writer
With 2 years of experience in the financial sector, Aparna brings a wealth of knowledge and insight to Investor Welcome. As an accomplished author and investment specialist, Aparna has a passion for demystifying complex financial concepts and empowering investors with actionable strategies. She has been featured in relevant publications, if any, and is dedicated to providing clear, evidence-based analysis that helps clients make informed investment decisions. Aparna Sahu holds a relevant degree or certification and is committed to staying ahead of market trends to deliver the most up-to-date advice.
