Tech giants see €350 bn early year downturn, reversing 2023 rally

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The year has begun with a decline in trading for the so-called ‘Magnificent Seven’ of leading technology groups – Apple, Amazon, Alphabet, Microsoft, Meta, Nvidia and Tesla.

Apple’s shares are leading the downturn, having fallen by 4.6% and contributing significantly to the general slump that resulted in total loss of €350 bn in market value to the seven companies, according to a Bloomberg tracking index.

“We don’t know if last year’s rally has fully ended, but it is completely normal to expect markets will pull back after a rally like we saw,” said Steve Sosnick, chief strategist at Interactive Brokers Group, as reported by Bloomberg.

“Without the year-end factors that turbocharged the rally, I think we’re seeing the party winding down.”

Apple’s stocks dropped following a downgrade by Barclays Plc analysts who predict weaker iPhone demand. 

Meanwhile, Tesla experienced an 8.8% decline over four days, its longest streak of losses in more than four weeks. Despite surpassing delivery expectations for electric vehicles in the fourth quarter, Tesla lost its leading position in electric car sales to China’s BYD Co.

According to Bloomberg, it’s too soon to say the tech surge is over. In 2023, most gains made up for earlier losses, and companies like Amazon, Alphabet, Meta, and Tesla are still below their peak values, hinting at further growth potential.

However, the major tech companies also have a challenging task in 2024. They must keep delivering strong and profitable technology, Sosnick noted.

“In December everyone bought the sizzle,” he said. “Now we have to see if the steak is any good.”