Big Tech sheds $200 billion in value as earnings disappoint this year

The so-called Magnificent Seven technology companies that fueled this year’s U.S. stock rally are posting disappointing earnings, wiping $200 billion from their market value and threatening to push the S&P 500 into a correction. Google owner Alphabet, Tesla and Facebook parent company Meta Platforms have all collapsed since the reports, with Microsoft the only bright spot. Amazon.com reports results after Thursday’s close, and the options market is implying an 8.1 percent one-day move for the stock in either direction — putting about $100 billion in market value at stake.

The remaining two – Apple and Nvidia – will report next month.

The seven companies were the story of the year in the stock market, with a surge in interest in artificial intelligence fueling gains for many of them. Optimism is waning due to higher interest rates and the war in West Asia: The S&P 500 is down 8.8 percent from its 2023 peak, putting it within range of the 10 percent decline defined as a correction in a bull market.

Yet there is still plenty of euphoria. The tech-heavy Nasdaq 100 Index, dominated by the Magnificent Seven, continues to rise 31 percent this year, meaning there is plenty of room for the market to decline.

Meta’s results will weigh heavily on the market when trading begins on Thursday. The stock fell 2.4 percent in premarket trading after the social media giant dashed investors’ hopes for a long-term advertising recovery, saying it was at the whims of an uncertain economic environment.

This follows Alphabet wiping out nearly $180 billion in market value on Wednesday after the company’s Cloud unit reported smaller-than-expected profits. The loss was the search giant’s biggest loss in market value in a single session. Earlier this month, Tesla’s value shrank by $72 billion in one day after its results.

For now, the only ray of hope among the big seven is Microsoft. The Windows software maker rose Wednesday to add about $75 billion in market value after the software giant reported first-quarter results that beat expectations. Alphabet and Microsoft, both of which follow Amazon in the cloud infrastructure space, are busy building out their AI offerings as a way to make their platforms more attractive to customers. Their divergent results raise the bar for cloud computing leader Amazon when it reports earnings on Thursday.