Capitalization of IT-companies in the U.S. crashed by $770 billion

The total share capital of five leading U.S. companies specializing in information technology (IT) declined over the week by $770 billion due to the negative reaction of financial market participants to the deterioration of their financial statements.

Amazon on Thursday released a $140 billion estimate for its fourth-quarter 2023 earnings, $15 billion below market expectations. Amazon’s forecast “sent shockwaves down Wall Street,” and the panic soon spread to all listed companies related to the online retail sector. To make matters worse, Meta’s weak earnings release on Wednesday sent investors dumping shares of every IT company in droves.

Capitalization of the five leading corporations in the sector – Amazon, Alphabet (owns the search engine Google), Apple, Meta and Microsoft – fell in value terms by “almost one trillion dollars” on Thursday, the “most dramatic day of trading,” the newspaper said. By Friday morning the market had gradually started to win back positions after Apple published its financial results for the third quarter, which were better than analysts’ expectations. As a result, a decrease in the capitalization of the leading corporations in the U.S. IT-sector amounted to $770 billion by the end of the week.

As the main reasons for the deterioration of the financial condition of companies in the industry observers of the newspaper argue the slowdown in profits growth in the segment of cloud computing, insufficient efforts to reduce costs, as well as high capital expenditures for the development of artificial intelligence and metaworlds. The decline in real disposable income in the U.S. due to inflation and the energy crisis also plays an important role, which negatively affects the volume of online commerce.