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In a dramatic turn of events, the U.S. stock market experienced a significant downturn on Monday, with the seven most valuable tech companies losing approximately $1 trillion in market capitalization. The rout has pushed the Nasdaq into correction territory, continuing a troubling trend for technology stocks.
At the market open, Nvidia saw its market cap plummet by over $300 billion, although it managed to recover some of the losses. By the close of trading, Nvidia’s market value was down 6.4%, equating to a loss of $168 billion. Apple and Amazon also faced severe declines, with Apple’s valuation dropping by $224 billion and Amazon’s by $109 billion at the open. By the end of the trading day, Apple was down 4.8%, or $162 billion, while Amazon fell 4.1%, translating to a $72 billion loss.
The declines extended to other tech behemoths, including Meta, Microsoft, Alphabet, and Tesla, bringing the total loss among the top seven tech companies to $995 billion early in the trading session. While there was some recovery later in the day, the overall market sentiment remained bearish.
The broader market fell sharply, driven by recession fears fueled by disappointing economic data from the previous week. Japan’s Nikkei 225 plummeted 12% on Monday, marking its worst day since the 1987 “Black Monday” crash. Bitcoin also suffered, dropping 11% and leading a broader sell-off in cryptocurrency and related stocks.
Investor concerns have been mounting for weeks, particularly following a 3.4% drop in the Nasdaq last week, which marked its worst three-week stretch in two years. The index fell an additional 3.4% on Monday. Disappointing earnings reports from Amazon, Alphabet, and Microsoft have further exacerbated investor anxiety.
This sharp decline contrasts with the optimism seen just a few months ago, when significant investments in artificial intelligence (AI) by tech leaders like Meta and Google were celebrated. Nvidia, which briefly surpassed Microsoft and Apple to become the world’s most valuable company due to its role in powering the AI boom, has now seen its market cap drop below $2.5 trillion from a peak of over $3 trillion.
Recent warnings from analysts, including a Goldman Sachs note highlighting potential overinvestment in AI, and criticisms from Elliott Management suggesting Nvidia might be in a “bubble,” have contributed to the growing uncertainty. Nvidia’s upcoming earnings report later this month will be closely watched as investors seek clarity on the company’s AI-driven revenue growth, which has exceeded 200% in the past three quarters.