Apple and NVIDIA Stocks Plunge: M7 Market Cap Temporarily Wipes Out $1 Trillion

Amid fears of a recession in the U.S., the New York Stock Exchange experienced a significant downturn on the 5th of this month

Amid fears of a recession in the U.S., the New York Stock Exchange experienced a significant downturn on the 5th of this month. Leading the decline were Apple and NVIDIA, with their stock prices falling more sharply than other major stocks. Market capitalization of the "Magnificent 7" (M7) tech giants saw a temporary loss of $1 trillion, exacerbated by significant events involving both companies.

On the morning of August 5th, at 11:50 AM Eastern Time (8:50 AM Pacific Time), Apple’s stock was trading at $210.18, down 4.40% from the previous trading day. NVIDIA’s stock fell by 5.61% to $101.25 during the same period. Apple’s intraday low reached $196.21, dipping below the $200 mark, while NVIDIA’s stock plummeted to $90.69, falling below $100.

These declines were notably steeper compared to other M7 stocks. Microsoft fell by 2.55%, Alphabet by 2.34%, Amazon by 3.73%, Meta by 2.22%, and Tesla by 3.48%. The sharper drop in Apple’s stock was attributed to Berkshire Hathaway, led by investment guru Warren Buffett, selling half of its holdings in Apple this year. Berkshire's second-quarter report, released on August 3rd, revealed it held $84.2 billion worth of Apple stock as of the end of June, down from $174.3 billion at the end of last year.

Analysts speculate that Buffett's move reflects either a negative outlook on Apple’s growth potential or concerns about the looming recession. The news triggered a wave of sell-offs, intensifying the stock's decline.

NVIDIA’s stock suffered due to delays in the release of its next-generation AI chips. According to IT media outlet The Information, NVIDIA notified its clients, including Microsoft and another cloud service provider, that the production of the Blackwell B200 AI chip would be delayed by at least three months due to a recently discovered defect. NVIDIA is now working with its semiconductor manufacturer, TSMC, on new testing procedures, and large-scale shipments are not expected until the first quarter of next year.

Despite the initial sharp declines, the M7 stocks, including Apple and NVIDIA, saw their losses somewhat mitigated by the end of the day. However, at one point, the combined market cap of the M7 had dropped by a staggering $1 trillion. This loss is equivalent to approximately one-third of Apple’s current market cap of $3.195 trillion.

The sharp decline in Apple and NVIDIA stocks amidst broader market fears underscores the volatility and uncertainty prevailing in the global economy. With concerns about a potential recession growing, investors are advised to approach the market with caution. The recent events highlight the significant impact of major financial moves and product delays on stock performance. Staying informed and making well-considered investment decisions will be crucial in navigating these turbulent times.