The market capitalization of the so-called 'Magnificent 7 (M7)'?including Apple, Nvidia, and Google Alphabet?evaporated by 1,000 trillion won in a single day. Amid growing concerns over a U.S. economic recession that weighed down the New York Stock Exchange to its worst level in two years, individual negative factors such as Berkshire Hathaway's stake sales, delays in next-generation chip launches, and antitrust lawsuits compounded the situation for major companies.
On Monday, the 5th (local time), Apple, the company with the largest market capitalization on the New York Stock Exchange, closed at $209.27 per share, down 4.82% from the previous session. Nvidia, the AI leader, also dropped 6.26% to $100.45. Google’s parent company Alphabet (-4.61%), Tesla (-4.23%), and Amazon (-4.10%) all plunged over 4%. Microsoft (MS) and Meta Platforms also saw declines of 3.27% and 2.54%, respectively.
Notably, six out of the seven M7 stocks, excluding Meta, recorded a daily drop exceeding the S&P 500 index’s worst single-day decline (-3.0%) in about two years since September 2022. During the session, Apple’s stock price briefly fell below the $200 mark. Nvidia also faced pressure near the $90 level.
This sharp market decline was triggered by a surge in U.S. recession fears following the July employment shock, combined with global capital outflows due to the unwinding of the 'yen carry trade.' Dan Cotsworth, an investment analyst at AJ Bell, commented, "Expectations for the so-called M7 have become too high. If their success does not live up to their greatness, the blade comes out," reflecting the market sentiment.
According to LSEG data, the market capitalization of the M7 stocks shrank by $800 billion (approximately 1,096 trillion won) in a single day. Apple’s market cap contracted from $3.342 trillion to about $3.2 trillion. Nvidia’s market cap also decreased from $2.639 trillion to $2.475 trillion. CNBC reported that at one point during the session, the M7’s market cap had evaporated by more than $1 trillion. Considering Apple’s current market cap is in the low $3 trillion range, this represents about one-third of its value.
Individual negative factors also contributed to the pressure on M7 stock prices. For Apple, news that Berkshire Hathaway, led by 'investment master' Warren Buffett, sold about half of its Apple shares this year had a negative impact. Analysts suggest this sale might reflect a pessimistic view of Apple’s growth potential or a decision influenced by recent recession concerns.
Nvidia’s stock plunged over 6% after foreign media reported that the launch of its next-generation chip would be delayed by at least three months from the original schedule. Additionally, Alphabet faced downward pressure after a federal court ruled that Google violated antitrust laws. Companies including Alphabet have recently experienced stock declines amid 'bubble theory' concerns on Wall Street and beyond, questioning when the massive AI investments by these firms will start to show profitability.
However, some analysts argue that considering the long-term fundamentals of the M7, the recent plunge could present a buying opportunity. Dan Ives, Wedbush Securities’ senior analyst and a proponent of tech bullishness on Wall Street, said, "Our strategy is to help investors move away from panic and irrational global sell-offs and hold stocks of the top technology companies and winners leading the growth theme."
Meanwhile, all three major indices on the New York Stock Exchange fell by around 3% on the day. The Dow Jones Industrial Average, composed of blue-chip stocks, plunged 2.6% to 38,703.27. The large-cap-focused S&P 500 index dropped 3.0% to 5,186.33, marking the largest daily decline since September 2022 for both indices. The tech-heavy Nasdaq index closed down 3.43% at 16,200.08.
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
