Market rout punishes megacap tech

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Market rout punishes megacap tech

Traders work on the floor of the New York Stock Exchange during morning trading on July 31, 2024.

Michael M. Santiago | Getty Images

As U.S. markets opened for trading on Monday, tech’s megacap companies lost about $1 trillion in market cap, deepening a downturn that sent the Nasdaq into correction territory last week.

Nvidia shed more than $300 billion in market cap at the opening bell, though it quickly recovered about half of its loss. Shares of the chipmaker closed down 6.4% for a loss of $168 billion. Apple and

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’s valuation plummeted $224 billion and $109 billion, respectively, at the market open. Apple ended down 4.8%, or $162 billion in market cap.

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dropped 4.1% at the close, or $72 billion.

Add all that to steep declines in Meta,

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, Alphabet and Tesla, and the seven most-valuable tech companies lost $995 billion in the early moments of trading. They bounced back some as trading progressed.

Markets fell broadly on Monday as concerns about a recession stemming from disappointing economic data last week pushed Japan’s Nikkei 225 down 12% on Monday, its worst day since the 1987 “****** Monday” ****** on Wall Street. Bitcoin plummeted 11%, leading a sell-off in cryptocurrency and related stocks.

Within technology, investors have been getting nervous for weeks. The Nasdaq slumped 3.4% last week, wrapping up its worst three-week stretch in two years, before losing another 3.4% on Monday.

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, Alphabet and

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all gave Wall Street reasons for concern in their reports, contributing to a slide among their peers.

It is a sharp change from a few months ago, when investors cheered as Meta CEO Mark Zuckerberg and

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CEO Sundar Pichai both said their companies were spending heavily to build out their artificial intelligence infrastructure.

Nvidia, a company unknown to most Americans, was the biggest beneficiary due to its graphics processing units, or GPUs, powering the AI *****. The company surpassed $3 trillion in market cap and briefly passed

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and Apple to become the world’s most valuable company. Its market cap now sits below $2.5 trillion.

Some analysts have been sounding the alarm of late regarding a potential overinvestment in AI.

A widely read Goldman Sachs note from June warned that the biggest-spending companies had little to show for their AI expenditures. Elliott Management, one of the largest hedge funds in the world, reportedly told clients that Nvidia was in a “bubble” and the AI frenzy was “overhyped.”

Nvidia reports earnings later this month. The company has generated revenue growth in excess of 200% for the past three quarters.

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