Bigtechs lose half a trillion dollars in a week

The seemingly “unstoppable” surge of bigtech stocks Microsoft, Nvidia, Alphabet, and Meta in recent years has hit its inevitable wall, with the Magnificent 7’s star performers suffering one of their worst weeks in a two-month retreat.

The stocks, which have capitalised on surging interest in artificial intelligence (AI) technologies in recent years, collectively lost more than US$490 billion (AU$727 billion) in value over the past five days, markets researcher Stocklytics has reported.

“The second half of 2024 has been uneasy for AI giants. After adding over $3.8 trillion to their stock values in the first six months of the year, July`s tech selloff sent shockwaves through the market, erasing almost 45% of their half-year gains,” writes Stocklytics’s Jastra Kranjec.

The drop has been attributed to a range of external factors, including the US Government’s expanded export restrictions on AI chips to China, expectations of future interest rate cuts by the Fed, as well as shareholder concerns over valuations and mixed earnings results.

Since July, the combined market cap of Microsoft, Nvidia, Alphabet, Meta, and Tesla has plunged by $2.36 trillion, representing more than 60% of their half-year gains.

The overwhelming majority of this collective $490 million drop – nearly two-thirds – over the preceding five days was attributed to chipmaker Nvidia, which lost $320 billion.

“On August 31, Nvidia had a market cap of $2.93 trillion, and now it’s $2.61 trillion,” Kranjec said.

Other bigtechs saw more modest losses, relatively speaking.

Alphabet’s stock value plunged by $90 billion since last week, falling from $2.02 trillion to $1.93 trillion. The world’s second most valuable tech company, Microsoft, lost $60 billion in five days, with its market cap now standing at $3.04 trillion.

Meta follows with a $20 billion drop and $1.3 trillion in stock value as of this week. Meta, what is more, has seen the biggest stock value drop in the past two months, losing $780 billion since the tech selloff started, or $150 billion more than Nvidia.

Bucking the wider Magnificent 7 trend, Tesla, “usually the worst-performer among the AI heavyweights”, Kranjec said, saw its market cap grow by nearly $17 billion since last week, helping its valuation to reach a $700 billion mark again.