Stock markets tumble amid jitters over tech companies’ growth
Stock markets in Europe and Asia took a tumble on Thursday, as jitters over the future growth of major tech companies sparked a global sell-off.
The pan-European Stoxx 600 dropped 1.3% to its lowest level since May this year, having been hit by a 2.75% decline in the Dutch chipmaker ASML, a 5.5% drop in Germany’s Infineon Technologies, and a 12.8% fall in Switzerland’s semiconductor company STMicroelectronics.
The rout began in the US overnight, where the tech-focused Nasdaq fell 3.6% on Wednesday, marking its biggest single-day decline since 2022. About $1tn (£776bn) was knocked off the value of the Nasdaq 100, which covers the most valuable firms on the index.
Losses were driven by AI-related companies, including Nvidia, Tesla and the Google-owner Alphabet, which have seen shares soar in recent months. Investors have poured money into the sector, to ensure they did not miss out on a potential tech boom in artificial intelligence.
It has raised concerns over whether excitement over major tech stocks, known as the Magnificent Seven, have been overblown. Nvidia fell 7%, Alphabet fell 5%, Microsoft dropped 3.5%, and Apple lost 3%. Other Magnificent Seven stocks also fell, including Facebook owner Meta, which dropped 5.6%.
Tesla had its worst decline since 2020, dropping 12% . The company’s boss, Elon Musk, reported a 45% fall in profits, and pushed back plans to unveil self-driving robotaxis from August to October, igniting scepticism among investors. Musk has been trying to drum up interest in plans for the robot taxis, artificial intelligence and “genuinely useful” humanoid robots, as demand for Tesla’s electric cars has cooled.
The stock market losses later spread to Asia, where tech-related firms continued their decline. That included Samsung, which fell 2%, Sony, which fell 5%, and tech investor SoftBank, which fell 9.4%. Japan’s Nikkei finished the session down 3%.
However, the AJ Bell investment analyst Dan Coatsworth said the sell-off may be a “necessary correction”.
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He added: “It is worth putting last night’s weakness into perspective, given indices were recently trading at record highs and there were big moves in some enormous companies.
“Whether this is a necessary correction to remove some froth from the market or something more dramatic will depend on forthcoming earnings from the likes of Microsoft, Meta, Apple and Amazon next week, as well as AI-star Nvidia at the end of August.”