Introduction
It seems like today is not a good day for the tech industry, as major companies such as Apple, Nvidia, Tesla, and others are experiencing a decline in their stocks. This occurrence may not be as rare as one might think.
The Nasdaq Composite’s Decline
On Thursday, the Nasdaq Composite witnessed a further drop of 1.2%, contributing to the downward trend of tech stocks. META Platforms (META), one of the leading companies in this sector, is down 3.3% due to its disappointing spending plans. Similarly, Alphabet (GOOGL) is facing a post-earnings slide, with a decrease of 1.9%. Amazon.com (AMZN) also suffered a 1% drop before its own release later in the day. Notably, Microsoft (MSFT), Apple (AAPL), and Nvidia (NVDA) all experienced over a 2% decline, while Tesla (TSLA) observed a decrease of 1.6%.
Diverse Businesses, Shared Challenges
Despite these collective setbacks, each company possesses distinct business models that contribute to their varied performance. Nvidia primarily focuses on chip manufacturing, whereas Alphabet depends on its Google search business and its growth in the cloud sector. On the other hand, Meta Platforms operates as a social media platform, Apple specializes in iPhone production, Tesla manufactures cars, Amazon’s core business is selling various products in addition to its significant presence in the cloud market, and Microsoft engages in diverse business operations, including cloud services.
Overall, while the tech giants collectively face a challenging day in the stock market, their individual strategies and areas of expertise provide some differentiation in their performance.
Market Data Analysis
Since its initial public offering in 2012, Meta has experienced quite a few significant market movements. Interestingly, all seven stocks have fallen on the same day 2,436 times out of 9,499 trading days with at least one decliner. This accounts for approximately 26% of the total occurrences, making it the highest number among the seven possibilities. Conversely, there have been only 401 instances, equivalent to 4.2% of the times, where just one stock experiences a decline while the rest rise.
Tech Sector Outlook
The ongoing downturn in the tech sector shows no signs of abating. Analyst Jordan Klein from Mizuho suggests that the current sentiment resembles a situation where individuals are quick to sell before seeking clarifications. Furthermore, the simultaneous drop in all seven stocks supports this notion. Klein points out that it seems impossible to find refuge in the Technology, Media, and Telecommunications (TMT) industry as investors pay little attention to positive news while focusing on the negative. As a result, they sell almost anything they had previously favored.
Amazon Earnings Impact
There is one crucial factor that could potentially reverse the current selling trend: Amazon’s upcoming earnings report, specifically with regard to its cloud business. Klein emphasizes the immense importance of Amazon’s results for the future direction of the tech sector. In his opinion, it will heavily depend on whether Amazon’s AWS (Amazon Web Services) exhibits stabilizing growth of around 11%, demonstrates significant changes either upwards or downwards, or remains stagnant.
Regardless of the outcome, it is highly likely that all seven stocks will move accordingly based on Amazon’s performance.