Technology stocks plummet for three consecutive weeks, led by Amazon, Intel | Real Time Headlines

With quarterly earnings from Big Tech companies largely a thing of the past, one thing is clear: Wall Street is nervous.

Nasdaq Index dejectedly It fell 3.4% this week and fell 8.8% in three weeks. It was the tech index’s worst performance during that stretch since September 2022, when the market plummeted on soaring inflation and rising interest rates, according to FactSet.

The narrative for the tech industry since late 2022 has been mostly positive, with the U.S. economy recovering from the pandemic and excitement about growth opportunities spurred by artificial intelligence.

The Nasdaq soared 43% last year and is still up 12% so far this year after climbing to a record last month.

But this past earnings season was disappointing, with some companies pointing to weaker-than-expected growth and some worrying that the construction of artificial intelligence infrastructure may encounter some obstacles.

Concerns about the overall U.S. economy hang over the industry. The Labor Department said Friday employment growth Economic growth slowed much more than expected in July while the unemployment rate edged higher, a day after economic data showed an unexpected surge in jobless claims and weakness in manufacturing.

Josh Koren, founder of Musketeer Capital Partners, said that technology giants with valuations exceeding trillions of dollars are increasingly part of the macro economy because they are so large that weakness in overall data will naturally show up in their performance.

Amazon and apple Both companies reported earnings on Thursday, with Amazon lost on revenue and issued disappointing forecasts apple Shows revenue growth of only 5%.

“As the economy slows down, businesses like Amazon, Apple, etc. will slow down,” Coren told CNBC’s “Squawk Box Europe” on Friday. “That’s what you’re seeing in earnings.”

Amazon plunged 8.8% on Friday, bringing its three-week decline to 14%. Executives on the earnings call attributed some of the reasons to income shortage Consumers are buying less expensive household goods and buying less big-ticket items like computers and televisions.

“We’re seeing a lot of the same consumer trends that we’ve been talking about last year, which is consumers being cautious and spending less,” Amazon Finance Chief Brian Olsavsky said on the call. We see signs of that continuing in the third quarter.”

apple result Less worrisome — the company’s earnings and revenue beat estimates — the stock closed slightly higher on Friday and for the week. But that comes after falling more than 5% in the previous two weeks.

Microsoft It is down 4% this week and 10% over the past three weeks. The tech giant released Weaker than expected forecast The Azure cloud business failed to achieve growth this quarter. Azure’s “core consumption has been impacted by capacity constraints and weakness in certain European regions,” Mizuho analysts wrote in a note following the report.

shares letter It fell slightly this week after falling 10% in the previous two weeks. In its earnings report, the company’s YouTube advertising revenue did not meet expectations, and the overall advertising growth rate was only 11%. This is much lower than the competition Yuanexpanded by 22%.

Meta is the leader of the group, with shares up nearly 5% this week Exceeded Wall Street expectations and issued optimistic forecasts for this season. CEO Mark Zuckerberg The company’s huge investments in artificial intelligence are paying off by creating more relevant ads and making it easier for marketers to create campaigns, the company said.

“I think there’s a lot of benefit in the way it improves recommendations, helps people find better content and makes the ad experience more effective,” Zuckerberg said during an earnings call last month. “These are products that are already scaling. . Our ongoing artificial intelligence work will improve this.”

Even after that rally, though, Meta has still fallen over the past three weeks.

Nvidia, the only major technology company that has yet to report results, is the biggest winner in the artificial intelligence boom. The stock is down 17% from the Nasdaq’s three-week plunge, but is still up more than 110% year to date.

Nvidia relies on spending by top tech peers to build out its artificial intelligence infrastructure. Because of Nvidia’s parabolic rise over the past few years, any signs of a potential decline could have a huge impact on its stock. The company is scheduled to announce results on August 28.

The other side of the semiconductor market is Intel.

Intel, once the world’s largest chipmaker, has been beaten by rivals in recent years and has fallen far behind in the artificial intelligence race. The stock has its Worst day in 50 years It plunged 26% on Friday, reaching its highest level since 2013.

Intel reported a sharp decline in profits and announced a massive restructuring that included 15% of its layoffs. CEO Pat Gelsinger told CNBC on Friday that this is “Intel’s largest restructuring since the transition to memory microprocessors forty years ago.” Investors weren’t convinced it would work.

In a note on Friday, analysts at KeyBanc Capital Markets lowered their forecasts for the stock and maintained a hold recommendation on the stock, citing a difficult road ahead.

“Given all of the challenges facing INTC, layoffs of this magnitude may make it more difficult to achieve its goals,” they wrote.