As the U.S. markets began trading this Monday, the tech industry’s megacap companies experienced a massive loss of approximately $1 trillion in market capitalization. This significant downturn further exacerbated the Nasdaq’s correction territory, which began last week. Particularly noteworthy was Nvidia’s loss of over $300 billion in market cap at the opening bell, although the company managed to recover about half of its initial loss. By 10 a.m. ET, Nvidia’s share prices had dropped by 7%. In addition to Nvidia, tech giants Apple and Amazon also witnessed drastic declines in their valuations, with losses amounting to $224 billion and $109 billion respectively at the market open. When combined with steep drops in Meta, Microsoft, Alphabet, and Tesla, the seven most valuable tech companies collectively lost a staggering $995 billion in the early hours of trading.
The market decline on Monday was not limited to the tech industry alone. In fact, concerns over a potential recession triggered by disappointing economic data from the previous week led to a 12% plunge in Japan’s Nikkei 225 index, marking its worst trading day since the 1987 “Black Monday” crash on Wall Street. The negative sentiment extended beyond traditional stocks to the cryptocurrency market as well, with Bitcoin experiencing an 11% plummet that sparked a sell-off across various digital assets and related stocks. Within the technology sector, investors have been growing increasingly anxious in recent weeks, as evidenced by the Nasdaq’s 3.4% decline last week, marking its most significant three-week slump in two years. The quarterly reports from Amazon, Alphabet, and Microsoft—each of which raised concerns among investors—contributed to a broader slide across the tech industry.
The recent market turbulence represents a stark departure from the optimism that prevailed just a few months ago when tech giants such as Meta and Google announced substantial investments in artificial intelligence infrastructure. Nvidia emerged as a key player in this space, leveraging its graphics processing units (GPUs) to power the AI boom. The company’s market cap surged past $3 trillion, briefly surpassing both Microsoft and Apple to become the world’s most valuable company. However, Nvidia’s market cap has since dipped below $2.5 trillion amid growing concerns among analysts regarding potential overinvestment in AI. A notable Goldman Sachs report from June cautioned that despite hefty AI spending, many companies had little to show for their investments. Moreover, Elliott Management—a major hedge fund—has raised alarms about Nvidia being in a “bubble” and the AI hype being “overhyped.” As Nvidia prepares to report its earnings later this month, its revenue growth exceeding 200% over the past three quarters will come under intense scrutiny.
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