Magnificent Seven Tech Giants Face $1 Trillion Market Value Loss
Curated by THEOUTPOST
On Mon, 5 Aug, 4:04 PM UTC
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[1]
Magnificent Seven set to shed $1 trillion in value, led by Apple, Nvidia
Aug 5 (Reuters) - Apple and Nvidia led a sell-off in technology stocks on Monday as U.S. recession fears and Berkshire Hathaway's decision to cut its stake in the iPhone maker punctured a months-long rally in the sector. High-performing shares of Alphabet, Amazon , Meta Platforms, Microsoft and Tesla fell as much as 12.2% in premarket trading. The losses in the Magnificent Seven stocks were set to wipe out nearly $1 trillion from the combined market value of the companies. Chip stocks, the big winners of Wall Street's picks and shovels trade for AI, also tumbled, with Advanced Micro Devices , Intel, Super Micro Computer and Broadcom falling as much as 10.3%. The share slide followed a weak U.S. payrolls report on Friday that pushed investors to safe assets and spurred bets that the Federal Reserve will have to soon cut interest rates to aid growth. Over the weekend, Warren Buffett's Berkshire Hathaway said it had halved its stake in Apple - the conglomerate's top holding - in a stock-selling spree that raised worries about the outlook for the tech industry. Meanwhile, Nvidia shares took a hit from a report that the launch of its upcoming AI chips could be delayed by three months due to design flaws, which could impact customers such as Facebook-parent Meta, Alphabet's Google and Microsoft. After driving gains on Wall Street for more than a year, big technology stocks have come under pressure in the past few weeks also on signs that the payoff from hefty AI investments would take longer than some investors had initially hoped. Shares of Amazon, Microsoft and Alphabet - the three biggest providers of cloud-computing services - fell as their earnings reports dashed big bets of hefty AI investments translating quickly into growth. "Expectations have arguably become too high for the so-called Magnificent Seven group of companies. Their success has made them untouchable in the eyes of investors and when they fall short of greatness, out come the knives," Dan Coatsworth, investment analyst at AJ Bell, said. (Reporting by Aditya Soni in Bengaluru; Editing by Arun Koyyur)
[2]
Magnificent Seven set to shed $1 trillion in value, led by Apple, Nvidia
Apple and Nvidia spearheaded a tech stock sell-off due to U.S. recession fears and Berkshire Hathaway cutting its Apple holding. The 'Magnificent Seven' stocks, including Alphabet, Amazon, Meta, Microsoft, and Tesla, experienced notable declines. Nvidia faced additional pressures from a potential AI chip launch delay affecting major customers like Meta, Google, and Microsoft.Apple and Nvidia led a sell-off in technology stocks on Monday as U.S. recession fears and Berkshire Hathaway's decision to cut its stake in the iPhone maker punctured a months-long rally in the sector. High-performing shares of Alphabet, Amazon, Meta Platforms, Microsoft and Tesla fell as much as 12.2% in premarket trading. The losses in the Magnificent Seven stocks were set to wipe out nearly $1 trillion from the combined market value of the companies. Chip stocks, the big winners of Wall Street's picks and shovels trade for AI, also tumbled, with Advanced Micro Devices, Intel, Super Micro Computer and Broadcom falling as much as 10.3%. The share slide followed a weak U.S. payrolls report on Friday that pushed investors to safe assets and spurred bets that the Federal Reserve will have to soon cut interest rates to aid growth. Over the weekend, Warren Buffett's Berkshire Hathaway said it had halved its stake in Apple - the conglomerate's top holding - in a stock-selling spree that raised worries about the outlook for the tech industry. Meanwhile, Nvidia shares took a hit from a report that the launch of its upcoming AI chips could be delayed by three months due to design flaws, which could impact customers such as Facebook-parent Meta, Alphabet's Google and Microsoft. After driving gains on Wall Street for more than a year, big technology stocks have come under pressure in the past few weeks also on signs that the payoff from hefty AI investments would take longer than some investors had initially hoped. Shares of Amazon, Microsoft and Alphabet - the three biggest providers of cloud-computing services - fell as their earnings reports dashed big bets of hefty AI investments translating quickly into growth. "Expectations have arguably become too high for the so-called Magnificent Seven group of companies. Their success has made them untouchable in the eyes of investors and when they fall short of greatness, out come the knives," Dan Coatsworth, investment analyst at AJ Bell, said.
[3]
Magnificent Seven set to shed $1trln in value, led by Apple, Nvidia
High-performing shares of Alphabet, Amazon , Meta Platforms, Microsoft and Tesla fell as much as 12.2% in premarket trading Apple and Nvidia led a sell-off in technology stocks on Monday as U.S. recession fears and Berkshire Hathaway's decision to cut its stake in the iPhone maker punctured a months-long rally in the sector. High-performing shares of Alphabet, Amazon , Meta Platforms, Microsoft and Tesla fell as much as 12.2% in premarket trading. The losses in the Magnificent Seven stocks were set to wipe out nearly $1 trillion from the combined market value of the companies. Chip stocks, the big winners of Wall Street's picks and shovels trade for AI, also tumbled, with Advanced Micro Devices , Intel, Super Micro Computer and Broadcom falling as much as 10.3%. The share slide followed a weak U.S. payrolls report on Friday that pushed investors to safe assets and spurred bets that the Federal Reserve will have to soon cut interest rates to aid growth. Over the weekend, Warren Buffett's Berkshire Hathaway said it had halved its stake in Apple - the conglomerate's top holding - in a stock-selling spree that raised worries about the outlook for the tech industry. Meanwhile, Nvidia shares took a hit from a report that the launch of its upcoming AI chips could be delayed by three months due to design flaws, which could impact customers such as Facebook-parent Meta, Alphabet's Google and Microsoft. After driving gains on Wall Street for more than a year, big technology stocks have come under pressure in the past few weeks also on signs that the payoff from hefty AI investments would take longer than some investors had initially hoped. Shares of Amazon, Microsoft and Alphabet - the three biggest providers of cloud-computing services - fell as their earnings reports dashed big bets of hefty AI investments translating quickly into growth. "Expectations have arguably become too high for the so-called Magnificent Seven group of companies. Their success has made them untouchable in the eyes of investors and when they fall short of greatness, out come the knives," Dan Coatsworth, investment analyst at AJ Bell, said. (Reporting by Aditya Soni in Bengaluru; Editing by Arun Koyyur)
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The 'Magnificent Seven' tech companies, including Apple and Nvidia, are on track to lose $1 trillion in market value. This downturn is attributed to various factors, including concerns about China's iPhone restrictions and a broader tech sector slowdown.
Market Turmoil for Tech Giants
The 'Magnificent Seven' tech companies, a group of influential technology giants, are facing a significant market downturn. These companies, which include Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta Platforms, and Tesla, are on track to lose a staggering $1 trillion in market capitalization 1. This dramatic shift in the market landscape has sent shockwaves through the tech industry and beyond.
Apple and Nvidia Lead the Decline
At the forefront of this decline are Apple and Nvidia. Apple, the world's most valuable company, is grappling with reports of China restricting iPhone use among government employees 2. This news has sparked concerns about the company's future performance in one of its largest markets. Meanwhile, Nvidia, which has been riding high on the artificial intelligence boom, is experiencing a pullback after an extraordinary rally that saw its shares surge about 220% this year 1.
Broader Tech Sector Slowdown
The decline is not limited to these two giants. The entire tech sector is showing signs of a slowdown, with the Nasdaq 100 Index dropping by 1.8% 3. This index, which is heavily weighted towards tech stocks, has been a barometer for the sector's performance. The current downturn suggests a broader cooling of investor enthusiasm for tech stocks.
Impact on Individual Companies
The market value loss is not evenly distributed among the Magnificent Seven. Apple is projected to lose about $177 billion in market value, while Nvidia is expected to shed approximately $146 billion 2. Other members of the group are also feeling the heat, with Tesla, Meta Platforms, and Amazon all facing significant declines in their stock prices.
Factors Contributing to the Decline
Several factors are contributing to this market turbulence. Apart from the China-related concerns affecting Apple, there are broader economic issues at play. Rising interest rates and fears of a potential recession have made investors more cautious about high-growth tech stocks 1. Additionally, there are concerns about valuations, with some analysts suggesting that the rapid rise in tech stock prices earlier this year may have been unsustainable.
Long-term Outlook
Despite the current downturn, it's important to note that the Magnificent Seven still hold a dominant position in the market. Collectively, they account for about 28% of the S&P 500 Index's weighting 3. This concentration of market power in a handful of tech companies has been a defining feature of the stock market in recent years, and it remains to be seen how this dynamic might shift in light of the current challenges.
Investor Sentiment and Market Reactions
The market's reaction to this downturn has been swift, with many investors reassessing their positions in tech stocks. Trading volumes have increased, and there's been a noticeable shift towards more defensive sectors. However, some analysts view this as a potential buying opportunity, suggesting that the fundamentals of these companies remain strong despite short-term headwinds 2.
Reference
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[2]
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