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On Aug 5th Monday, U.S. tech giants experienced a severe downturn, with the market capitalization of the seven largest tech companies shrinking by nearly $1 trillion. Nvidia saw a dramatic drop of over $300 billion at the market open but later recovered some losses, ending the day down 6.4%, or $168 billion. Apple and Amazon also faced significant declines, losing $224 billion and $109 billion in valuation, respectively. Apple closed down 4.8% and Amazon 4.1%.
The broader market was impacted by growing recession fears, following disappointing economic data. The Nikkei 225 dropped 12%, marking its worst day since the 1987 "Black Monday" crash, while Bitcoin fell 11%, leading a sell-off in cryptocurrencies.
This decline in tech stocks follows a period of enthusiasm about AI investments, which had previously driven up valuations. Nvidia, a major player in AI technology, had briefly surpassed $3 trillion in market cap but now stands below $2.5 trillion. Analysts have recently raised concerns about overinvestment in AI, with some questioning the returns on these expenditures. Nvidia's upcoming earnings report is highly anticipated, given its impressive revenue growth over the past three quarters.
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