Magnificent Seven Set to Shed $1 Trillion in Value, Led by Apple and Nvidia
Apple (AAPL.O) and Nvidia (NVDA.O) led a sharp sell-off in technology stocks on Monday, fueled by U.S. recession fears and Berkshire Hathaway’s (BRKa.N) decision to reduce its stake in Apple, disrupting a prolonged rally in the sector. High-performing stocks such as Alphabet (GOOGL.O), Amazon (AMZN.O), Meta Platforms (META.O), Microsoft (MSFT.O), and Tesla (TSLA.O) fell up to 12.2% in premarket trading. The losses in the “Magnificent Seven” stocks were set to erase nearly $1 trillion from their combined market value.
Chip stocks, which have been top performers in the AI boom, also tumbled. Advanced Micro Devices (AMD.O), Intel (INTC.O), Super Micro Computer (SMCI.O), and Broadcom (AVGO.O) fell as much as 10.3%. The sell-off followed a weak U.S. payrolls report on Friday, prompting investors to seek safer assets and anticipate Federal Reserve interest rate cuts to support growth.
Warren Buffett’s Berkshire Hathaway announced over the weekend that it had halved its stake in Apple, raising concerns about the tech industry’s outlook. Nvidia shares were also impacted by reports of a potential three-month delay in the launch of its upcoming AI chips due to design flaws, affecting customers such as Meta, Alphabet’s Google, and Microsoft.
Big technology stocks, which had driven Wall Street gains for over a year, have faced pressure recently due to signs that returns from significant AI investments might take longer to materialize. Shares of Amazon, Microsoft, and Alphabet, the three largest cloud-computing providers, fell after their earnings reports failed to meet high expectations of rapid growth from AI investments.
“Expectations have arguably become too high for the so-called Magnificent Seven group of companies. Their success has made them untouchable in the eyes of investors and when they fall short of greatness, out come the knives,” said Dan Coatsworth, investment analyst at AJ Bell.
