Big technology stocks sank Tuesday, a potentially worrisome omen as the darlings of 2023's explosive gains lost hundreds of billions of dollars of market value.
Topline
Big technology stocks sank Tuesday, a potentially worrisome omen as the darlings of 2023’s explosive gains lost hundreds of billions of dollars of market value.
Key Facts
The tech-heavy Nasdaq Composite fell 1.6% in the opening trading session of the year, a far wider loss than the Dow Jones Industrial Average’s 0.1% gain and S&P 500’s 0.6% fall.
Tuesday was the Nasdaq’s worst day since October 25 and its lowest closing price since mid-December.
Driving much of the tech slump was a 4% drop by Apple’s stock, a dive precipitated by an analyst downgrade questioning why the $2.9 trillion (market capitalization) company is trading at such an expensive valuation considering its negative earnings and profit growth.
Other members of the “magnificent seven” tech stocks, which gained a collective $5.1 trillion in market cap last year, also flailed Tuesday.
Alphabet, Amazon, Meta, Microsoft, Nvidia and Meta each fell 1% or more, while Tesla was the sole magnificent seven member left unscathed, as its shares were flat after the automaker reported more fourth-quarter electric vehicle deliveries than forecasted.
Big Number
About $238 billion. That’s how much market value the magnificent seven lost Tuesday.
Key Background
The Nasdaq rose more than 40% in 2023, erasing most of 2022’s historic losses and easily outperforming the Dow and S&P’s respective returns. Much of tech’s gains were due to investor optimism about the longer-term profitability for breakthroughs in generative artificial intelligence, rather than a corresponding uptick in earnings, leading to concerns about the health of the rally.
Surprising Fact
Microsoft is now just $130 billion behind Apple for the title of the world’s most valuable company, a mantle held by Apple since late 2021.
This article was written by Derek Saul from Forbes and was legally licensed through the DiveMarketplace by Industry Dive. Please direct all licensing questions to legal@industrydive.com.