Big Tech, comprising industry titans Alphabet, Amazon, and Meta Platforms, experienced a downturn on Monday, marking a departure from their leading position in the market throughout 2023. While the broader market, represented by the S&P 500, saw a modest 0.1% gain, the notable decline in most big tech stocks suggests a shift in market dynamics.
Stock Performance: In the early trading hours, Alphabet’s shares (GOOG, GOOGL) dipped by 2.7%, Amazon (AMZN) saw a 2.6% decrease, and Meta Platforms (META) faced a 3.8% drop. By 1:10 p.m. ET, these percentages moderated slightly to 1.9%, 2%, and 2.8%, respectively. Although these individual movements may seem modest, the cumulative effect resulted in a significant market cap decline of over $60 billion.
Alphabet’s AI Struggles: Alphabet, a tech giant often viewed as a frontrunner in artificial intelligence (AI), encountered challenges that contributed to its Monday decline. Investors had high expectations, anticipating Alphabet to catch up with OpenAI and Microsoft in the AI race. However, last week’s demo of the Gemini model fell short of expectations. The company acknowledged discrepancies in prompt lengths compared to the widely released video, and the AI’s responsiveness was slower than depicted. Despite Alphabet’s strong position in AI, the demo’s underperformance has slightly shaken public trust, raising questions about the company’s immediate future in the AI landscape.
Meta Platforms and Stock Sales: Meta Platforms faced a decline linked to CEO Mark Zuckerberg’s recent stock sales totaling $228 million since the beginning of November. While Zuckerberg retains a controlling stake in the company, such sales, the first since 2021, were not received positively by investors. The move raises concerns, as stock sales by key executives are often interpreted as signals that may impact investor sentiment.
Amazon’s Cloudy Day: While no specific adverse news surrounds Amazon, the correlation in the decline of big tech stocks suggests a broader market movement. Despite potential benefits from robust holiday retail sales and the growing influence of Amazon Web Services in driving profits, the company found itself swept up in the overall downturn of big tech stocks.
Perspective Amidst the Decline: Despite the challenges faced on Monday, a broader view over the past year reveals that all three tech giants—Alphabet, Amazon, and Meta Platforms—have consistently outperformed the market. The resilience demonstrated over an extended period underscores the enduring strength of these companies, providing a more optimistic perspective for long-term investors.
In conclusion, while Monday brought temporary setbacks for big tech, the overall trajectory and past performance suggest that these industry leaders remain formidable players in the technology landscape.
