The US tech sector lost nearly $900 billion in stock value today (Monday, August 5) as investors worried about an economic slowdown and the tech giants running out of steam. Apple was particularly hard hit after Warren Buffett announced he had halved his stake.
The “Magnificent Seven” plummet on the stock market
The seven largest US technology companies, dubbed the “Magnificent Seven” (Apple, Nvidia, Amazon, Alphabet, Meta, Microsoft and Tesla) saw their shares fall sharply on Monday. Nvidia lost more than 8% following announced delays to its upcoming AI chips.
Amazon and Microsoft also fell by more than 5%, as investors worried about the profitability of their cloud services. In total, nearly $900 billion in market capitalization went up in smoke in a single session for these giants, who had nevertheless carried Wall Street in recent months.
This Black Monday is not limited to American tech. All the stock indices in the world have declined, starting with the French CAC 40 which recorded a decline of 3%. While no one is spared, it is true that tech companies are more affected, particularly because of uncertainties related to artificial intelligence and future American regulations against the backdrop of tense presidential elections.
Apple particularly affected
Apple was the symbol of this rout, losing up to 11% at the start of trading. The main cause: the announcement this weekend that Berkshire Hathaway, Warren Buffett’s investment fund, had halved its stake in Apple, going from 5.6% to around 2.8% of the capital.
A major surprise given Buffett’s long-standing support for Apple. But the billionaire preferred to take profits after the stock’s sharp rise in recent months, driven by the successful launch of Apple Intelligence. Berkshire also wanted to increase its cash position in the face of recession risks.
Despite the blow, some analysts remain bullish on Apple. Its services revenue jumped to $24.2 billion, and Apple Intelligence is expected to support growth. After the initial drop, the stock has limited its losses to about 5%.
But this dark session is a reminder of the volatility of the tech sector, even for behemoths like Apple. The stratospheric valuations achieved thanks to AI seem fragile in the face of doubts about the economy. Silicon Valley giants will have to prove that their bets on generative AI will pay off.