Tech Sinks in First Week of August

The first half of 2023 brought many positive developments for investors, driven by outstanding reports from several tech titans. These results broadly exceeded anticipations, strengthening growth sectors – which enjoyed an explosive start to the year – and further intensifying expectations for potential earnings from the emerging AI domain.

Indeed, the Information Technology sector was the best performer within the S&P 500 until the end of July. 

Unfortunately, however, the month of August has not gotten off to a good start. The first week proved a tough period for the tech behemoths, as evidenced by the freefall of the S&P Information technology index (-4.14%). Microsoft shares lost 3.13% while Apple stocks plunged 7.07%. Despite the tech giant posting  higher-than-expected quarterly profits – partly due to robust demand for services – Apple’s revenue declined as customers curtailed spending. 

Chipmakers did not fare any better. They also dragged down the tech sector with Qualcomm Inc shedding 6.16% for the week, after the company reported weaker-than-expected quarterly revenue and guidance. Nvidia Corporation was also hit by the trend reversal (down 4.43%).

Consequently, tech ETFs exhibited poor performance over the course of last week.