The so-called "magnificent seven" technology stocks, that have powered this year's rally in US equities have wiped off nearly $400 billion ($386 billion to be precise) from their market capitalisation after reporting disappointing earnings. The underperformance of stocks like Microsoft, Meta, Tesla, and Alphabet post their results, has already pushed the Nasdaq into correction territory.
An index enters "correction territory" after falling over 10% from its peak. It must be noted that the Nasdaq is still up over 20% so far in 2023.
Amazon.com Inc. is not being considered in this market capitalisation erosion as it reported earnings after market hours on Thursday. The stock though, had gained in extended trading after optimistic comments from its CEO Andy Jassy.
The other two companies in this list - Apple Inc. and NVIDIA Corp. are due to report their results in November.
In May this year, CNBC-TV18 had spoken about the narrowest rally ever with only six stocks - Apple, Microsoft, NVIDIA, Alphabet, Amazon and Facebook-parent Meta, contributing to all of the S&P 500's gains. As of closing on Thursday, the S&P 500 is down 9.8% from its peak.
Meta shares also fell on Thursday after the management expressed some softness in its advertising business in the current quarter. Shares fell 3.7% despite stronger-than-expected results.
The fall came on the heels of Alphabet wiping out $180 billion from its market capitalisation on Wednesday courtesy of its biggest single-day drop in three years. The market cap erosion was the biggest in a single session on record for Google's parent. Earlier this month, Tesla had shed $72 billion in market value in a single session post its earnings.
Alphabet and Microsoft, which both trail Amazon in cloud infrastructure, have been racing to build up their AI offerings as a way to make their platforms more enticing to customers. Their diverging sets of results raise the bar for cloud computing leader Amazon.
(With Inputs From Agencies.)
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