Nvidia, Microsoft, Apple, Amazon Erase $1.1 Trillion In Monday Sell-Off: Bubble Burst Or Market Correction?

Author: Natan Ponieman | August 05, 2024 02:53pm

The battered tech sector continued to suffer on Monday as a global sell-off of stocks and other assets pulled markets towards bear territory.

A slight uptick in U.S. unemployment, published on Friday, reignited fears of a recession that rippled across the globe. Some indices saw historical drops, including Japan's Nikkei 225 stock index, which dropped more than 13.4% at its lowest point on Monday.

The Nasdaq Composite has been the worst affected among the main U.S. averages.

Some Saw It Coming: The correction had been anticipated by several analysts for at least a month before the downturn began. Wedbush's Daniel Ives minimized the panic, calling the sell-off "just a white knuckle moment in a multi-year bull run for tech stocks."

Ives and other pundits have argued against fears of a market bubble bursting around AI-oriented stocks.

Tesla Inc (NASDAQ:TSLA) CEO Elon Musk has said that renowned investors like Warren Buffett were "clearly expecting a correction." Tesla stock is down over 3% on Monday at the time of this writing, with the EV maker losing over 13% in the past five trading days.

On Monday, Buffett's Berkshire Hathaway Inc Class B (NYSE:BRK) got rid of half its stake in Apple Inc (NASDAQ:AAPL), causing the tech giant to lose almost 10% of its value after the market bell rang on Monday morning. The company quickly recovered throughout the day, and is down 5.5% on an intraday basis at the time of writing.

• Berkshire itself has also been hit by the sell-off, and is down over 5% in the last five trading days.

• At its worst point on Monday, Apple’s market cap lost $364 billion in just a few minutes when compared to its closing price on Friday. That exceeds the combined market cap of 3M Co (NYSE:MMM), Dow Inc (NYSE:DOW), DuPont de Nemours Inc (NYSE:DD) and BASF SE (OTC:BASFY).

• Amazon.com Inc (NASDAQ:AMZN) has also been struck by the market panic, losing over 12% in the last five trading days. The company is down 4.1% on Monday alone. At its lowest point on Monday, Amazon's market cap was down by $171 billion when compared to Friday's closing price. That's more than Intel Corp‘s (NASDAQ:INTC) entire market cap.

• Microsoft Corp (NASDAQ:MSFT) is down by 7.3% in the last five trading days and 2.8% on Monday. The company’s market cap was down $172 billion at its lowest point on Monday, or three times the combined market caps of American Airlines Group Inc (NASDAQ:AAL), United Airlines Holdings Inc (NASDAQ:UAL), Delta Air Lines, Inc. (NYSE:DAL) and Southwest Airlines Co (NYSE:LUV).

Read also: Google’s Bold AI Ad Backfired Amidst Olympic Fervor, Stirring Public Debate On Technology Versus Human Creativity As Shares Tumble 6.59% At Opening

Nasdaq Takes The Worst Blow: The Nasdaq Composite has been the worst hit among the major indices. The average, which covers the tech-heavy Nasdaq exchange, has lost about 6% of its value in the last five days.

ETFs following the 100 biggest companies in the Nasdaq have also taken a hit. Invesco NASDAQ 100 ETF (NASDAQ:QQQM) is down 5.3% in the last five days, following a similar trajectory of its sibling fund Invesco QQQ Trust, Series 1 (NASDAQ:QQQ).

Semiconductor stocks continued to lead the drop after a months-long rally that took major players to record market caps.

• Intel Corp has been one of the worst hit in the sell-off, losing more than 34% in the last five trading days, with losses of almost 6% on Monday alone. The generalized market panic was added on top of the company's worse-than-expected quarterly results last week.

• NVIDIA Corp (NASDAQ:NVDA) has lost 10% of its value in the last five trading days and 6.4% on Monday alone. The company saw losses of more than 13% on Monday at the market open, quickly recovering throughout the day. Nvidia’s market cap was down by $407 billion at its lowest point on Monday, when compared to its Friday closing price. That's about half the entire government spending on Medicare for 2023.

• Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM) experienced a drop of over 10% at its worst point on Monday, but quickly recovered and is down 2% at the time of this writing, with losses of over 8% in the last five trading days.

• VanEck Semiconductor ETF (NASDAQ:SMH), the largest ETF following the semiconductor sector, has lost 11% of its value in the last five trading days and is down 2.1% on Monday.

• iShares Semiconductor ETF (NASDAQ:SOXX) and SPDR S&P Semiconductor ETF (NYSE:XSD), which also follow the chips sector, have experienced a similar trend.

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