(Reuters) – Apple and Nvidia led a sell-off in technology stocks on Monday as fears of a U.S. recession and Berkshire Hathaway’s decision to reduce its stake in the iPhone maker fueled a months-long rally in the sector.
Top performers Alphabet, Amazon, Meta Platforms, Microsoft and Tesla fell as much as 12.2% in premarket trading.
The losses in the Magnificent Seven stocks would wipe nearly $1 trillion from the companies’ combined market value.
Chip stocks, the big winners of Wall Street’s trade in AI, also fell, with Advanced Micro Devices, Intel, Super Micro Computer and Broadcom falling as much as 10.3%.
The stock’s drop followed a weak U.S. payrolls report on Friday that drove investors to safe-haven assets and spurred bets that the Federal Reserve will soon need to cut interest rates to support growth.
Over the weekend, Warren Buffett’s Berkshire Hathaway said it had halved its stake in Apple – the conglomerate’s top holding – in a stock selloff that raised concerns about the outlook for the technology industry.
Meanwhile, Nvidia shares took a hit from a report that the launch of its upcoming AI chip could be delayed by three months due to design flaws, which could affect customers such as Facebook parent Meta, Alphabet’s Google and Microsoft.
After driving gains on Wall Street for more than a year, major tech stocks have come under pressure in recent weeks also on signs that the payoff from hefty AI investments would take longer than some investors had initially hoped.
Shares in Amazon, Microsoft and Alphabet — the three biggest cloud service providers — fell as their earnings reports hit big bets on hefty AI investments that quickly translated into growth.
“Expectations have arguably become too high for the so-called Magnificent Seven group of companies. Their success has made them untouchable in the eyes of investors and when they fall short of greatness, the knives come out,” Dan Coatsworth, investment analyst at AJ Bell, said.
(Reporting by Aditya Soni in Bengaluru; Editing by Arun Koyyur)