The "Magnificent Seven" Tech Stocks Lose Their Shine

In a shocking turn of events, more than $280 billion vanished from the combined market value of the esteemed "magnificent seven" tech stocks.

by Faruk Imamovic
The "Magnificent Seven" Tech Stocks Lose Their Shine
© Getty Images News/Chris Hondors

In a shocking turn of events, more than $280 billion vanished from the combined market value of the esteemed "magnificent seven" tech stocks. This unexpected plunge was a direct response to the recent earnings reports released on October 25th, igniting apprehensions about a potential tech recession on the horizon.

Who Are the "Magnificent Seven?"

The term "magnificent seven" isn’t a reference to a classic Western film, but instead to the modern giants of the technology industry. These comprise the illustrious blue-chip tech firms: Apple, Microsoft, Meta (formerly Facebook), Amazon, Alphabet (Google's parent company), Nvidia, and Tesla.

Collectively, these seven tech behemoths account for a staggering quarter of the S&P 500 index's value. Of these, Alphabet took the most significant hit. Its share price plummeted by over 9%, erasing $180 billion from its market capitalization.

To put this in perspective, this decline was Google’s most drastic since the COVID-19 pandemic's initial impact in March 2020. Meanwhile, Amazon, Nvidia, and Meta experienced share price decreases of 5.5%, 4.3%, and 4.2% respectively, as reported by Y Charts.

In contrast, Apple and Tesla endured milder losses, with their shares dropping 1.35% and 1.9%, respectively. Interestingly, Microsoft emerged as the exception among its peers, with its share price escalating by 3.1%. This positive movement was attributed to its better-than-anticipated growth in the Azure business segment.

Is a Tech Recession in the Cards?

The recent selloff has prompted considerable speculation about the health and future of the tech industry. The Kobeissi Letter described this market reaction as "the most widespread tech selloff in months," leading the S&P 500 to tumble to a 5-month low.

The firm further elaborated, "This is what happens when the few stocks that are holding up the entire market break. " Their statement hinted at the possibility that investors might be factoring in an imminent recession. Kobeissi, in a subsequent commentary, observed, "It seems like buyers are becoming more hesitant as headwinds accumulate." On a brighter note, while tech stocks appear to be on shaky ground, the cryptocurrency market is showing signs of life.

Over the past week, there's been palpable optimism, primarily attributed to the potential approval of spot Bitcoin exchange-trade funds in the US. This buoyancy has resulted in the crypto market cap surging by 16.3% to a remarkable $1.3 trillion, as per data from CoinGecko.

While the traditional tech sector faces uncertainties, cryptocurrency emerges as the potential silver lining, illustrating the unpredictable and ever-evolving nature of global financial markets.