Big Tech Blues: NYSE Plunges as Investors Fret Over Giants’ Performance
The New York stock market fell due to concerns about the performance of major technology companies. Although the September economic indicators announced on this day showed good results, it was not enough to prevent the decline in stock prices.
At the New York Stock Exchange (NYSE) on the 31st (Eastern time), the Dow Jones Industrial Average closed trading at 41,763.46, down 378.08 points (0.90%) from the previous day. The Standard & Poor’s (S&P) 500 index closed at 5705.45, down 108.22 points (1.86%) from the previous day, and the Nasdaq Composite Index closed at 18,095.15, down 512.78 points (2.76%) from the previous day.
Microsoft (MS) and Meta announced third-quarter earnings that exceeded market expectations, but continued expansion of investment in artificial intelligence (AI) raised market concerns.
Microsoft’s sales in the third quarter recorded $65.59 billion, a 16% increase compared to the same period last year, and total net profit increased 11% to $24.67 billion. Meta sales also exceeded market expectations, increasing 19% from the previous year to $40.59 billion.
However, during this period, Microsoft’s capital expenditures, including AI investments, increased by 5.3% compared to the previous quarter to $20 billion. Accordingly, capital expenditures in fiscal 2025 are expected to reach $80 billion, an increase of $30 billion compared to the previous year. Mehta said it expects capital spending to continue to increase significantly in 2025, raising its forecast for capital spending for fiscal 2024 from $37 billion to $40 billion to $38 billion to $40 billion.
The problem is that, considering such large-scale investment expansion, growth did not meet market expectations. Analysis suggests that detailed indicators have also amplified the anxiety of market participants. Although the growth rate of Microsoft’s Azure cloud service business reached 33%, there are predictions that cloud growth will slow.
Accordingly, Microsoft’s stock price plummeted 6% that day. This is the first time since October 26, 2022 (-7.72%) that the daily stock price drop exceeded 6%. Meta’s stock price also fell by 4%.
“We have reached a stage where the passion and potential for artificial intelligence (AI) alone is not enough,” said Ross Mayfield, investment strategist at Bird Private Wealth Management. “These companies are still leveraged by the topic and have favorable long-term growth potential, but the price “The growth was not fully revealed as reflected in,” he said.
Apple and Amazon earnings announced after the market closed that day also showed good performance. Apple announced that its third quarter sales increased 6% compared to the same period last year, reaching $94.93 billion, and earnings per share (EPS) of $1.64. All are above market expectations.
Amazon announced that its sales in the third quarter of this year were $158.9 billion and EPS was $1.43. As expected, they all exceeded market expectations. However, the stock price is falling more than 1% in after-hours trading due to lower-than-expected performance in the Greater China region, the core market. On the other hand, Amazon’s stock price is rising by more than 3% in after-hours trading due to its ‘surprising performance’ level.
Although the September Personal Consumption Expenditures (PCE) price index and the Labor Department’s employment index announced on this day met market expectations, they failed to prevent the decline in stock prices.
NVIDIA stock prices plummeted 4.72%, and TSMC and Broadcom stock prices also fell 2.03% and 3.89%, respectively. AMD and Qualcomm stock prices also fell 3.05% and 2.89%, respectively. Accordingly, the Philadelphia Semiconductor Index, which consists of semiconductor-related stocks, also closed down 4.01%.
“Investors are paying more attention to the performance of Microsoft and Meta than to economic news,” said Peter Cardillo, chief market economist at Spartan Capital Securities.
Reporter Information Jiwon Lee jeewonlee@ajunews.com