Big Tech Stocks Slide as Recession Fears Deepen

A series of technology sector misfortunes -- including the global IT outage hitting 8.5 million computers last month, Nvidia’s delay in AI chips for major tech firms, Intel’s announcement of historic layoffs, and worsening geopolitical tensions -- were likely contributing factors in Monday’s historic Big Tech selloff that slashed nearly $1 trillion from the top seven tech listings in pre-trading hours.

At the start of trading on Monday, a wide swath of tech stocks took steep dives, including Microsoft (down 4.6%), Alphabet (down 6%), Tesla (down 12%), Meta (down 6.8%), Amazon (down 8.3%), and Nvidia (down 10%). All of Wall Street’s main indexes fell at open, including the Dow Jones Industrial Average (down 681.07 points) the S&P 500 (down 195.42 points, or 3.66%), and the Nasdaq Composite (down 1,063.63 points, or 6.34%).

The CBOE Volatility Index, Wall Street’s main predictor of investor anxiety, marked its largest-ever jump to a high of 65.73, up 42 points from its Friday close.

The US economy has flirted with recession on-and-off since the COVID-19 pandemic and aftermath. GenAI, bolstered by the success of OpenAI’s ChatGPT release, helped buoy the industry as tech firms raced to adopt new technology.

Nvidia was a clear leader in the artificial intelligence (AI) arms race. The GPU giant reportedly told cloud customers like Microsoft and other major providers that its Blackwell B200 AI chips were delayed by at least three months because of a design flaw, according to a report by The Information.

The first signs of major losses came from early reports of Japan’s market freefall. Japan’s Nikkei dropped 12.4% on Monday -- the biggest drop since 1987’s “Black Monday.” Japan’s stock market has suffered a 27% drop since its peak in July, wiping out $792 billion in market value.

Jim Caron, CIO of the portfolio solutions group at Morgan Stanley Investment Management Solutions, told Reuters that the sell-off was likely not the sign of wider economic woes:

“We’ve had exposure to high quality fixed income like everyone else. For Treasuries, we’re certainly not looking at these levels to add exposure. In corporate bonds, we are seeing some spread widening. The question is, is this the start of something much bigger where there’s a stop in economic activity and difficulty accessing credit? We don’t see that happening. Spreads are wider but not at levels that scream great opportunity, so we’re going ride out the fixed income wave for the time being.”

This story is developing.