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High-performing shares of Alphabet, Amazon, Meta Platforms,
Microsoft and Tesla fell as much as 12.2% in premarket trading.
The losses in the Magnificent Seven stocks were set to wipe out
nearly $1 trillion from the combined market value of the
companies.
Chip stocks, the big winners of Wall Street's picks and shovels
trade for AI, also tumbled, with Advanced Micro Devices, Intel,
Super Micro Computer and Broadcom falling as much as 10.3%.
The share slide followed a weak U.S. payrolls report on Friday
that pushed investors to safe assets and spurred bets that the
Federal Reserve will have to soon cut interest rates to aid
growth.
Over the weekend, Warren Buffett's Berkshire Hathaway said it
had halved its stake in Apple - the conglomerate's top holding -
in a stock-selling spree that raised worries about the outlook
for the tech industry.
Meanwhile, Nvidia shares took a hit from a report that the
launch of its upcoming AI chips could be delayed by three months
due to design flaws, which could impact customers such as
Facebook-parent Meta, Alphabet's Google and Microsoft.
After driving gains on Wall Street for more than a year, big
technology stocks have come under pressure in the past few weeks
also on signs that the payoff from hefty AI investments would
take longer than some investors had initially hoped.
Shares of Amazon, Microsoft and Alphabet - the three biggest
providers of cloud-computing services - fell as their earnings
reports dashed big bets of hefty AI investments translating
quickly into growth.
"Expectations have arguably become too high for the so-called
Magnificent Seven group of companies. Their success has made
them untouchable in the eyes of investors and when they fall
short of greatness, out come the knives," Dan Coatsworth,
investment analyst at AJ Bell, said.
(Reporting by Aditya Soni in Bengaluru; Editing by Arun Koyyur)
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