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The Nasdaq Composite plunged 3.4% this week, extending its three-week decline to 8.8%, marking the steepest drop for the tech-heavy index since September 2022. This downturn follows a season of disappointing earnings from major tech companies, overshadowing the previous optimism surrounding the tech sector’s recovery and AI advancements.
Key Earnings Reports and Market Reactions:
- Amazon: The stock fell 8.8% on Friday, contributing to a 14% decline over the past three weeks. Amazon’s revenue missed expectations, and the company projected softer growth due to consumers opting for cheaper household items and reduced spending on higher-ticket products.
- Apple: Despite reporting top-line growth of 5% and a slight increase in stock price this week, Apple has experienced a drop of over 5% in the previous two weeks.
- Microsoft: Shares slid 4% this week and are down 10% over the past three weeks. Microsoft’s weaker-than-expected forecast and underwhelming performance in its Azure cloud segment contributed to the decline.
- Alphabet: The company’s stock fell slightly this week following a 10% drop in the previous two weeks. Alphabet’s YouTube ad revenue missed estimates, and overall ad growth was significantly lower than rival Meta.
- Meta: Standing out positively, Meta’s stock rose almost 5% this week after beating estimates and issuing an optimistic forecast. However, it remains down over the past three weeks.
Notable Moves in the Semiconductor Sector:
- Nvidia: Despite being a major beneficiary of the AI boom, Nvidia’s stock fell 17% over the three-week period. The company, scheduled to report results on August 28, has seen significant gains year-to-date but remains vulnerable to market fluctuations.
- Intel: The company faced its worst day in 50 years, with a 26% drop in stock value. Intel reported a substantial earnings miss and announced a major restructuring plan, including a 15% workforce reduction. Analysts expressed skepticism about Intel’s ability to overcome its challenges.
The tech sector’s recent struggles reflect broader economic uncertainties, including slower job growth and weakening manufacturing data, which have impacted investor sentiment and contributed to the current market slump.