Tech stocks are in the midst of a $1 trillion erasure today as markets continue to reel from Friday’s gruesome jobs report. The tech-centric Nasdaq Composite is on track to lose 4% of its value on one of the worst days for stocks in recent memory.
After some previous concerns surrounding a spontaneous tech stock correction, last Friday’s jobs data has essentially sealed the deal. The Nasdaq is now down more than 12% over the past month, putting the index firmly in correction territory.
Reasonably so, the July jobs data showed the U.S. economy added just 118,000 jobs last month, reflecting an unemployment rate of 4.3%, the highest level since October 2021. As a result, recession fears have reached a fever pitch, along with speculation that the Federal Reserve has taken too long to cut rates.
Chipmaker Nvidia (NASDAQ:NVDA) is eyeing a more than 7% loss today as it continues to trudge through its own correction. NVDA stock has lost 20% of its value in just the past month. Today alone, the stock has lost more than $300 billion in market capitalization. That said, NVDA stock is still up 107% on the year. Fellow tech giants Apple (NASDAQ:AAPL) and Amazon (NASDAQ:AMZN) are also down today, 6% and 4%, equivalent to losses of $224 billion and $109 billion, respectively.
Why Are Tech Stocks Down Today?
Some analysts speculate the recent losses could be due to the bursting of an artificial intelligence (AI) bubble that has been forming this year. Not for nothing, the promise of AI-optimized revenue growth has seen tech stocks surge this year, nearly across the board.
Indeed, tech stocks had enjoyed a notably strong 2024 heading into August, with the Nasdaq at one point enjoying gains of more than 25% for the year. That lead has been cut down to just 9.5%, with more losses potentially on the way.
Still, others reckon today’s selloff is more panic than prudent.
“The swift change in market mood regarding AI…looks premature, in our view,” noted Min Lan Tan, head of the Asia Pacific Investment Office at UBS Global Wealth. “It will likely take some time for companies to demonstrate that they can earn a return on their AI investments, but there are no indications that companies are backing away from these investment plans given the technology’s promise.”
Regardless, the “Magnificent Seven” has seen better days. Each member of the illustrious tech group is on track to lose value today, likely in excess of $1 trillion altogether.
On the date of publication, Shrey Dua held LONG positions in NVDA. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor held a LONG position in NVDA.
