Technology stocks underwent a significant selloff on Tuesday, causing the Nasdaq 100 to potentially shed more than $1 trillion in market value. This downturn was exacerbated by Elon Musk's SpaceX, which dipped below a $2 trillion valuation for the first time since its IPO. SpaceX's shares, having lost over $600 billion in market value across three sessions, were trading around $149.1 in premarket, only about 9% above its initial public offering price of $135. The broader tech-heavy Nasdaq 100 index futures dropped 2.5%, implying a fall of over 700 points, with Reuters calculations suggesting a $1.15 trillion market value loss if the index declines by 2.79%.
Chipmakers, previously strong performers in the AI sector, experienced heavy losses. Intel and Advanced Micro Devices each fell by 6.8% and 5.2% respectively. Memory chipmakers, who were among the best-performing stocks on the S&P 500 this year, also saw steep declines, with Micron Technology down 8%, SanDisk falling 9.2%, and Western Digital losing 7.5%. Even six of the "Magnificent Seven" tech giants faced pressure as investor concerns grew regarding the substantial capital required for AI infrastructure investments.
Prominent tech companies like Alphabet shed 2.1%, Amazon.com fell 1%, Tesla was down 3%, Nvidia lost 3%, and Apple was 0.4% lower in premarket trading. These companies were poised to collectively erode $345 billion in market value if losses persisted. Microsoft, however, was an outlier, climbing 1.3%. The selloff was primarily driven by growing worries about elevated AI spending valuations and the expectation of tighter monetary policy from the U.S. Federal Reserve under its new Chair, Kevin Warsh. Traders are now pricing in a total of 50 basis points in rate hikes by December, a significant increase from earlier expectations of a single 25-basis-point raise, as economic data points to a resilient economy.
