Affected by the market environment and multiple negative factors, the "seven giants" of the US stock market collectively plummeted, with their market value evaporating nearly $800 billion overnight.
On August 5th local time, the Nasdaq 100 index fell 3.43% to 16200.08 points; The S&P 500 index fell 3.31% to 5186.33 points; The Dow Jones Industrial Average fell 1.25% to 38703.27 points. State Street Bank's Technology Select Industry SPDR Fund (NYSE: XLK) fell 2.91%.
The seven giants of the US stock market, including Apple, Amazon, Google's parent company Alphabet, Microsoft, Meta, Nvidia, and Tesla, all fell, with Nvidia leading the decline, with its stock price plummeting 6.36% to close at $100.45 per share, and its market value evaporating by over $650 billion (approximately RMB 4.63 trillion). Apple fell 4.82%, marking its worst single day performance since September 2022; Google fell 4.45%, Tesla fell 4.23%, Amazon fell 4.10%, Microsoft fell 3.27%, and Meta fell 2.54%.
On the 5th, the market value of the "Big Seven" fell by nearly $1.3 trillion in a single day, evaporating nearly $800 billion (about 5.7 trillion yuan) as of the close. This is the largest market value evaporation of a technology giant since the listing of Meta platform (then Facebook) in 2012. The Bloomberg Magnificent 7 Price Return Index closed down 4.30%.
Analysis suggests that the sharp decline of the "Big Seven" is mainly due to external factors, including unexpectedly weak employment data in the United States, lower than expected performance of other companies, seasonal market headwinds, and the impact of closing yen carry trades.
However, these giants themselves are also facing increasing regulatory pressure and investors' concerns about when massive investments in AI (artificial intelligence) will yield returns.
Dan Coatsworth, an investment analyst at AJ Bell, a UK investment services firm, said: "People's expectations for the so-called 'Big Seven' group may be too high. In the eyes of investors, their success made them once unbeatable, and once these companies fail to demonstrate outstanding performance, they will face retaliation
For Nvidia, which experienced the largest decline among the "Big Seven" on the 5th, there have been multiple bearish news in the market recently. According to foreign media reports, design flaws in Nvidia's AI chips may lead to a delay of three months or more in release, affecting major clients such as Meta, Google, and Microsoft, who have already ordered chips worth billions of dollars.
On August 4th, in response to the news of the delayed release of Nvidia AI chips, Nvidia responded to a reporter from The Paper, saying, "As we have previously stated, the demand for Hopper is very strong, and sample trials of Blackwell have begun widely, with production expected to increase in the second half of the year. Besides, we do not comment on rumors
In addition to delayed product delivery, according to foreign media reports, the US Department of Justice may initiate an antitrust investigation into Nvidia, mainly involving a merger case and Nvidia's business practices. This investigation is mainly due to complaints from Nvidia's competitors that Nvidia may have abused its market dominance by "forcing" cloud computing suppliers to purchase multiple Nvidia products when selling AI chips.
The US Department of Justice is still investigating whether Nvidia will increase the price of network equipment for customers who want to purchase AI chips from its competitors such as AMD.
Last week, analysts at Elliott Management, a hedge fund, pointed out that Nvidia was in a "foam", and the AI technology that had pushed the chip giant up was also "over hyped".
In addition, Apple's stock price has been significantly affected by the reduction of holdings by the "stock god" Buffett. Berkshire Hathaway Inc. (BRK.A.US, BRK.B.US, hereinafter referred to as "Berkshire"), owned by Warren Buffett, recently disclosed that the company sold a significant amount of Apple shares in the second quarter, reducing its holdings from 789 million shares in the first quarter to about 400 million shares, a decrease of 49.3%; Berkshire Hathaway's holdings in Apple were valued at $84.2 billion, a decrease of 51.69% from $174.3 billion at the end of the first quarter.
Buffett's reduction in Apple shares is not surprising, but the scale of the reduction is unexpected. Previously, Berkshire Hathaway reduced its stake in Apple by 13% in the first quarter and hinted at its annual meeting in May that this was due to tax reasons. Some Berkshire Hathaway observers have anticipated a reduction in holdings in the second quarter, as Buffett typically continues to reduce a significant amount of equity once he begins to do so, with external estimates of the reduction reaching around 100 million shares.
However, some analysts argue that there is no need to overreact to Buffett's reduction in his holdings of Apple. Joe Gilbert, Senior Portfolio Manager at Integrity Asset Management, said, "Buffett's reduction in Apple shares is just for risk management. If there are any concerns about Apple's long-term operations, Buffett will close out all positions
Prior to the opening of the US stock market, the Japanese and Korean stock markets had already experienced a major collapse due to increased expectations of a Federal Reserve interest rate cut, concerns about a US economic recession, and the "ebb tide" of yen arbitrage trading caused by the appreciation of the yen.
According to the Big Wisdom VIP data, as of the close of August 5th, the Nikkei 225 Index fell 4451.28 points to 31458.42 points, marking the largest historical decline of 12.4%. The South Korean stock market also experienced a significant decline. As of Monday (August 5th), the South Korean Composite Index closed down 8.77% at 2441.55 points, and the South Korean Kostak Index fell more than 11%.
In addition to the Japanese and Korean markets, there has also been a collective adjustment in global stock markets. In the Asia Pacific market, the FTSE Singapore Straits Index, FTSE Malaysia Composite Index, Australian S&P 200, Indonesian Composite Index, MSCI Vietnam, and India SENSEX30 Index all experienced a decline.
On Monday (August 5th), major European stock indexes also fell sharply at the opening, with the European Stoxx 50 index falling 2.94%, the German DAX index falling 2.43%, the UK FTSE 100 index falling 1.77%, and the French CAC40 index falling 1.29%. Among them, after the opening of Türkiye's stock market, the circuit breaker mechanism within the market scope was triggered twice.
It is worth noting that on August 6th, the Japanese and Korean stock markets opened significantly higher. As of press time, the Nikkei 225 Index and the CSI Index have expanded their gains to over 6%.