$1 trillion wipeout: Market rout punishes megacap tech

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


Amazon’s
valuation
plummeted
$224
billion
and
$109
billion,
respectively,
at
the
market
open.
Apple
ended
down
4.8%,
or
$162
billion
in
market
cap.
Amazon
dropped
4.1%
at
the
close,
or
$72
billion.

Add
all
that
to
steep
declines
in


Meta,


Microsoft,


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
“Black
Monday”
crash
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.
Amazon,
Alphabet
and
Microsoft
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
Google
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
boom.
The
company
surpassed
$3
trillion
in
market
cap
and
briefly
passed
Microsoft
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.