(Reuters) – Apple and Nvidia led a sell-off in technology stocks on Monday as fears of a U.S. recession and Berkshire Hathaway's decision to cut its stake in the iPhone maker ended the sector's months-long rally.
High-yielding shares of Alphabet, Amazon, Meta Platforms, Microsoft and Tesla fell as much as 12.2% in premarket trading.
The losses in the Magnificent Seven shares would wipe nearly $1 trillion off the companies' combined market value.
Chip stocks, the big winners in Wall Street’s trade in AI picks and shovels, also fell. Advanced Micro Devices, Intel, Super Micro Computer and Broadcom fell as much as 10.3%.
The stock market drop followed a weak U.S. jobs report on Friday, which sent investors fleeing to safe havens and fueled bets that the Federal Reserve will soon have to cut interest rates to boost growth.
Over the weekend, Warren Buffett’s Berkshire Hathaway announced it had halved its stake in Apple, the conglomerate’s largest holding, a series of stock sales that raised concerns about the tech sector’s outlook.
Meanwhile, Nvidia's shares took a hit following a report that the launch of its upcoming AI chips could be delayed by three months due to design flaws, which could impact customers including Facebook parent company Meta, Alphabet's Google and Microsoft.
After more than a year of Wall Street gains, big tech stocks have come under pressure in recent weeks amid signs that the massive investments in AI are taking longer to pay off than some investors had initially hoped.
Shares of Amazon, Microsoft and Alphabet, the three largest providers of cloud computing services, fell as their earnings reports undercut big investments in AI, which quickly translated into growth.
“Expectations have probably become too high for the so-called Magnificent Seven group of companies. Their success has made them untouchable in the eyes of investors and if they are not great, the knives will come out,” said Dan Coatsworth, investment analyst at AJ Bell.
(Reporting by Aditya Soni in Bengaluru; Editing by Arun Koyyur)
