Tech stocks, particularly the major technology companies, experienced a decline in value throughout August 2024.
Concerns about rising costs for artificial intelligence infrastructure and increasing recession risks made tech-related stocks more vulnerable during market corrections.
This accounted for a decline in Alphabet Inc.'s (GOOGL.O’s) market value by 4.7%. The key reasons for this plunge were driven by the slowdown in ad revenue at YouTube and an antitrust law violation ruling by a US court against Google. Weighing on Alphabet's stock performance is new competition from OpenAI, which is developing an AI-based search engine prototype.
Amazon.com Inc. (AMZN.O) also slipped 4.5% as slower online sales underscore broader challenges in the e-commerce sector.
Tesla Inc.'s market capitalization fell 7.7%, as the company reported weaker-than-expected Q2 earnings, while concerns mounted over a proposed 100% tariff by Canada on electric vehicles manufactured in China, which could dent the profitability of Tesla's Shanghai-made EVs and add more pressure to its higher-cost U.S. production base.
Nvidia Corp. (NVDA.O) also slumped 7.7% in the last week of August and came at a market value of 2.92 trillion dollars. This was after Nvidia's forecasted third-quarter gross margins that were below market expectations and revenue, which only met estimates, disappointing investors who were hoping for a star performance from the leader in AI chips.
On the other hand, Eli Lilly (LLY.N) surged around 20% after the drugmaker forecasted record annual profit owing to strong sales and a successful weight-loss drug launch cutting the risk of type 2 diabetes in overweight adults.
Berkshire Hathaway's (BRKa.N) market value surpassed $1 trillion for the first time in August, reflecting investor confidence in the conglomerate often seen as a proxy for the U.S. economy.
Meta Platforms Inc. (META.O) surged nearly 10% in market value, as stronger-than-expected second-quarter revenue in addition to upbeat revenue forecasts for the July-September quarter on expectations of robust digital ad spending to help offset the costs of its AI investments.