tech stocks recover from sell-off

Apple briefly broke through a $5 trillion stock market valuation on Tuesday, joining Nvidia as one of only two public companies in history to reach the threshold, as big technology stocks recovered from a sell-off over fears about overspending on artificial intelligence and growing competition from China.

Shares in the iPhone maker closed up $3.17, or 0.9 per cent, at $340.08, giving a market capitalisation of $4.99 trillion. Nvidia came back from Monday’s 5 per cent drop with a gain of $0.82, or 0.4 per cent, to $197.33 and a value of $4.77 trillion.

The fall in Nvidia’s stock had spooked investors in the Asia Pacific. South Korea’s Kospi index dropped more than 10 per cent to a three-month low on Tuesday, with the chipmakers SK Hynix and Samsung among the biggest losers.

The decline triggered a “circuit breaker” as the Kospi headed for its largest monthly loss on record, surpassing the declines suffered during the Asian financial crisis in 1997.

Jing Jie Yu, an equity analyst at Morningstar, said: “We believe the market was likely spooked by the progress of China’s chipmaking equipment capabilities, and was worried that this progress would threaten the competitive position of global chipmaking and chip equipment leaders.”

He added that the sell-off was “largely a knee-jerk reaction and overdone”, and that the dominant position of global chipmaking leaders is unlikely to be threatened meaningfully.

On Wall Street, after a negative start to the session, some of the Big Tech stocks recovered. Microsoft, which reports quarterly earnings on Wednesday, closed up $5.16, or 1.3 per cent, at $394.26.

Another beneficiary was Elon Musk’s SpaceX, with the shares up $2.91, or 2.6 per cent, at $116.41, though still below the flotation price of $135.

Not all technology stocks fared so well. The chipmaker Sandisk was down 12.5 per cent and Micron Technology shed 8.9 per cent, in a session that underlined how far the moves have varied between companies exposed to the same AI investment cycle.

The tech-heavy Nasdaq composite closed marginally lower, down 0.2 per cent at 24,876.91, for a fifth consecutive trading day of falls. The more broadly based S&P 500 rose 0.2 per cent to 7,428.78.

The divergence between the two indices leaves the concentration of the US market in a small number of technology names, a pattern that has drawn caution from UK fund investors, unresolved.

Apple’s move above $5 trillion was not sustained into the close, leaving Nvidia as the only company to have finished a session above the level.

Jamie Young

Jamie Young is Senior Reporter at Business Matters, covering SME finance, employment law and Westminster policy since 2016. He has reported on every Budget and Autumn Statement since 2018, helped make sense of the ‘covid era’ and the bounce-back loan scheme from launch through the fraud investigations, and broke the magazine’s coverage of the 2024 late-payment reforms. He joined Business Matters straight from completing his BA in Administration from Exeter University and is NCTJ-qualified. Reach him at jyoung@cbmeg.co.uk

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