Shares of Amazon and Nvidia enteredcorrection territory on Tuesday as the technology sector's selloff intensified.
The recent pressure on Amazon's stock(AMZN) means it has essentially wiped out all the gains it saw following the
company's third-quarter earnings report. Those earnings originally seemed to
change the tune around the stock, solidifying the company as one that's
benefiting from artificial intelligence.
And while that may still be true, WallStreet seems less preoccupied with finding AI winners given increased scrutiny
of the cost of the technological buildout. Amazon recently completed a $15
billion debt deal, partly to finance its AI ambitions.
Read: As Amazon raises $15 billion in abond deal, investors worry about companies taking on too much AI debt
Meanwhile, the selloff in Nvidia shares(NVDA) comes as that company prepares to report earnings on Wednesday
afternoon.
"Numbers and expectations are verywell telegraphed," said Jeffrey Favuzza, a tech, media and
telecommunications strategist with Jefferies. But there's still "a lot of
excitement" around Nvidia, he added, while predicting a "buy-the-dip
mentality," as earnings could prove to be a clearing event for the market.
Other Big Tech stocks have swiftly fallenout of favor as well. Tesla's stock (TSLA) is already in a correction, which is
defined as a drop of 10% or more from a recent closing high. And since Nov. 4,
Meta's stock (META) has been in bear-market territory, which is categorized as
a 20%-plus decline off recent closing highs.
See also: The lone bear on Meta's stockforesaw its struggles - and sees more trouble ahead
Looking outside the group of megacap techstocks known as the Magnificent Seven, shares of Broadcom (AVGO) and Advanced
Micro Devices (AMD) entered corrections earlier in November, while Oracle's
stock (ORCL) has been in a bear market since Oct. 30. It closed Tuesday at 33%
off its recent highs.
Oracle shares have given back all themassive gains they saw after the cloud company's last earnings report, when it
disclosed 359% growth in its remaining performance obligations, a measure of
business that has been contracted but not yet recognized as revenue.
"Basically that entire RPO backlogthat OpenAI gave them and committed to is now completely out of the
stock," Favuzza said.
Apple (AAPL) and Alphabet (GOOG) (GOOGL)shares have held up better, both off less than 3% from their recent highs.
Apple has been more disciplined than the other Big Tech players when it comes
to AI spending, so it's not subject to the same investor worries about the cost
of AI financing. And Alphabet is "still the most crowded long on a
tactical basis" within the Magnificent Seven, according to Favuzza.
"They seem to be firing on allcylinders from the product-innovation side now that there's a little bit less
concern on the antitrust side," he told MarketWatch. A judge in September
declined to issue steep penalties in a monopoly case that could have forced the
divestiture of Chrome.