Shares in several major technology companies plunged Monday morning amid a wider sell-off in the market.
Nvidia saw the biggest drop out of the Magnificent Seven tech stocks, opening 14.2 percent down compared to market close on Friday. Tesla opened 10.9 percent down, while Apple slid 9.6 percent, and Amazon fell 8.2 percent at the start of trading.
Meta, the parent company of Facebook and Instagram, opened 7.6 percent down, while Google parent Alphabet dipped 6.8 percent. Microsoft saw the least volatility out of the major tech stocks, falling 4.8 percent at market open Monday.
Shares in all seven companies recovered slightly by midday, though they remained down.
The tech stocks’ steep slide Monday morning came as the wider market took a downturn amid growing concerns about a recession. Investors were spooked by Friday’s weaker-than-expected jobs report, which showed the U.S. adding only 114,000 jobs and the unemployment rate ticking up to 4.3 percent.
The Dow Jones Industrial Average opened with a loss of 1,100 points Monday, dropping 2.8 percent, while the Nasdaq composite fell 6.2 percent, and the S&P 500 index sank 4.2 percent after the market opened.
“The perfect storm panicked tech sell-off has now gained steam after the weaker jobs report yesterday fueled the R word fears and worries the Fed is now too late in its cutting cycle with tech stocks in the center of this Category 5 storm sell-off,” analysts from Wedbush Securities wrote in a research note Saturday.
Major tech stocks, which were already on shaky footing after mixed second-quarter results over the past two weeks, are also reeling from Warren Buffett’s decision to cut Berkshire Hathaway’s stake in Apple by half.
However, the Wedbush analysts argued in another note Monday morning that now “is not the time to panic on the tech trade.”
“We are getting inbounds from investors around the world today/over the weekend asking us if this tech bull market and historic run for tech stocks is over?” they wrote. “It’s NOT in our view and this is just a white knuckle moment in a multi-year bull run for tech stocks that need hand holding.”
Amid widespread excitement about the potential of artificial intelligence (AI), the tech sector has driven much of the market’s gains this year. As of late June, the Magnificent Seven accounted for 75 percent of the S&P 500’s gains, according to Axios.
However, the tech stocks have also been a drag on the market in recent weeks. After lackluster earnings reports from Alphabet and Tesla in late July, the S&P 500 and the Nasdaq composite both fell to multiweek lows.
Despite the current selloff, John Higgins, chief markets economist for Capital Economics, is skeptical that the AI-fueled market rally has ended.
“It feels less like 2000 — when the dotcom bubble popped — than 1998 — when a temporary pullback in share prices coincided, like now, with a resurgent yen,” Higgins wrote in an analysis Monday.
“Even then, there is a big difference between the present and 1998: the absence of a major problem in, and risk to, the US financial system,” he continued. “Our best guess is that the stock market will recover, as the economy holds up better than feared and investors rediscover their enthusiasm for AI.”
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