Magnificent 7 Losing Over $700 Billion in Value Today, Here's Why

Investing

Published: August 5, 2024 4:19 pm

Last Updated: August 5, 2024 10:32 pm

Stocks are in freefall, with each of the three of the major indices sinking by roughly 3%.
After showing signs of a recovery last week, the Magnificent 7 stocks were not immune to today’s selling pressure.
Nvidia stock erased $288 billion in value, the worst one-day drop in corporate America’s history.
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On the heels of Asia’s market sell-off, U.S. investors are running for the exits, sending the major indices, including the Dow Jones Industrial Average, S&P 500 and Nasdaq, spiraling by approximately 3% each. In one of their worst days of trading history, the Magnificent 7 stocks were not immune to the selling pressure despite showing early shoots of recovery last week. Considering the Magnificent 7’s 40%-plus weighting in the Nasdaq 100 index, their performance has a major influence in setting the tone for market sentiment.

Fears of an economic recession amid a weak U.S. jobs report on Friday sparked the selling pressure, leaving the Federal Reserve between a rock and a hard place on interest rates. With earnings season underway, worries about corporate profits in an uncertain environment are adding fuel to the fire. While tech market caps tumble, here’s a glimpse into how much money the Magnificent 7 stocks lost in today’s bloodbath of a session.

Tech Sell-Off

Nvidia: Upon losing 6.5% on the day, Nvidia’s (Nasdaq: NVDA) market cap is hovering at $2.49 trillion, erasing $288 billion in value since Friday. According to The Wall Street Journal, Nvidia was on track for the single-biggest one-day market cap decline in the history of corporate America.

The latest sell-off drops Nvidia to the No. 3 spot in the rankings among the world’s most valuable companies based on market cap, now surpassed by Microsoft (Nasdaq: MSFT) and Apple (Nasdaq: AAPL) as tech giants continue to jockey for position. Nvidia reportedly uncovered a design flaw in its AI chip, delaying the release of the high-demand product by at least three months and setting off a chain reaction among its partners.

Alphabet: Google parent company Alphabet (Nasdaq; GOOGL) has lost 4% in today’s market sell-off to just below $160 per share. Alphabet’s market cap has slipped to below $2 trillion, contributing to the massive decline in the Magnificent 7 stocks. A U.S. court has ruled against Google in an antitrust case brought against the search giant by the U.S. DOJ, with a judge deciding that the company skirted the law to maintain its dominance in search and online ads.

Meta Platforms: Facebook parent company Meta Platforms (Nasdaq: META) lost roughly 3% on the day to revisit the $470 area. At a market cap of $1.2 trillion, Meta is one of Nvidia’s customers and therefore its data centers will likely be impacted by the AI chip delay.

Tesla: Shares of EV maker Tesla (Nasdaq: TSLA) are down approximately 5% today, as the stock gets caught up in the market rout. Tesla could also be affected by Nvidia’s AI chip delay as the EV maker has been ramping up its reliance on Nvidia’s H100 chips for its vehicles, doling out billions of dollars on “training and inference AI.” Musk is also reportedly prioritizing AI chip shipments for X and Xai over Tesla, placing the EV maker several months behind Musk’s other companies, which may not have gone over well with investors.

Amazon: Shares of e-commerce giant Amazon (Nasdaq: AMZN) are down about 4.4% on the day to hover at $160 per share. The company’s market cap of $1.68 trillion has sunk from $1.76 trillion on Friday. Amazon Founder Jeff Bezos has been unloading shares of the company of late, coinciding with a drop of $16 billion in his net worth. Bezos has implemented an automated selling program to unfold through year-end 2025, one that appears to be suspended when AMZN stock falls below $200 per share. Amazon hasn’t suffered losses of this magnitude since 2022 when it missed earnings estimates by a mile.

Microsoft: Shares of Microsoft (Nasdaq: MSFT) lost 3.5% on the day to below the psychologically sensitive $400 per share. Since Friday, Microsoft’s market cap has fallen below $3 trillion to $2.9 trillion. Microsoft could present a buying opportunity for investors considering Wall Street analysts have an average price target of $500 on the stock, reflecting upside potential of over 25%.

Apple: Last but not least, Apple (Nasdaq: AAPL) shares lost approximately 5% on the day to $209 per share. Billionaire Warren Buffett’s Berkshire Hathaway (NYSE: BRK-B) has been unloading shares of the iPhone maker, selling close to 50% of its holdings in Q2. Fellow billionaire Elon Musk suggested on his X platform that Buffett “is clearly expecting a correction of some kind or otherwise simply cannot see better investments than Treasury bills,” adding in no uncertain terms that the “Fed needs to drop rates.”