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Tech Stock Roundup: Nvidia Hit By Record Drop; Focus On Big Tech Earnings

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Giuseppe Ciccomascolo
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Key Takeaways
  • Nvidia lost a record $589 billion in market cap in a single day, driven by concerns over higher competition from the Chinese AI lab DeepSeek.
  • Several major tech companies, including Tesla, Microsoft, Meta, and Apple, reported mixed earnings for Q4 2024.
  • Investors are now awaiting earnings results from Alphabet, Amazon, and Palantir.

Nvidia suffered a record $589 billion loss in market cap, surpassing its previous negative record, due to fears of increased competition from Chinese AI lab DeepSeek.

Meanwhile, mixed earnings reports from Tesla, Microsoft, Meta, and Apple have added volatility to the tech market, with upcoming earnings from Alphabet, Amazon, and Palantir drawing investor attention.

Nvidia Loses $600 Million in One Day

Nvidia lost nearly $589 billion in market cap in a single day, setting a new record and surpassing its previous high from last fall, when it lost $279 billion.

This massive drop makes Nvidia one of only three companies to lose more than $200 billion in a single day, joining Meta and Amazon.

However, unlike Meta and Amazon, which saw declines due to disappointing revenue and profit guidance in 2022, Nvidia has experienced similar major market shifts several times.

On Monday, Jan. 27, 2025, NVDA stock  decreased by 17% to close at $118.58, marking its worst trading day since March 2020 during the early days of the COVID-19 pandemic. The drop led to a 3.1% decline in the tech-heavy Nasdaq.

The sharp sell-off was triggered by growing concerns over increased competition from Chinese AI lab DeepSeek, which released a free, open-source large language model in late December.

DeepSeek claimed it took just two months and under $6 million to develop the model using Nvidia’s lower-end H800 chips, potentially reducing the demand for Nvidia’s premium GPUs.

Despite the concerns, analysts at Cantor  believe the fears around peak GPU demand are overblown, suggesting that AI advancements will likely increase the demand for computing power, not decrease it.

However, following Nvidia’s massive stock run-up—239% in 2023 and 171% in 2024—the market is now on edge about potential pullbacks in AI-related spending.

Broadcom, another major chipmaker benefiting from AI, also saw a 17% drop in its stock price, erasing $200 billion from its market cap.

Big Tech Reports Mixed Results

Four of the Magnificent Seven tech companies reported their results for the last quarter of 2024 last week. Tesla’s fourth-quarter results  fell short of Wall Street expectations .

The company posted earnings per share of 73 cents, missing the expected 76 cents. Revenue was $25.71 billion, below the anticipated $27.26 billion. Tesla’s automotive revenue dropped 8%, and net income dropped by 71%.

Microsoft shares fell following its fiscal second-quarter results, which showed slower growth in Azure and a weaker-than-expected revenue outlook.

While Microsoft reported  earnings of $3.23 per share and revenue of $69.63 billion, its Q3 revenue estimate of $67.7-68.7 billion missed analyst estimates .

Azure’s growth slowed to 31%, and Microsoft incurred $2.3 billion in other expenses. Despite challenges, Microsoft continues to invest in AI, including a $750 million stake in OpenAI, but concerns about scaling its cloud capacity remain.

Meta’s fourth-quarter results exceeded expectations , with record revenue of $48.39 billion and net income of $20.84 billion, up 49%. Meta’s strong performance  was driven by Facebook and Instagram growth and increasing AI-driven capital spending.

The company expects Q1 2025 revenue between $39.5 billion and $41.8 billion, reflecting an 8%-15% annual increase.

Apple slightly surpassed analysts’ expectations  in its first-quarter earnings  for fiscal year 2025, with revenue rising 4% to $124.30 billion, just above estimates of $124.12 billion.

Earnings per share were $2.40, exceeding the expected $2.35. Shares jumped after CEO Tim Cook signaled  a revenue growth trajectory for the next quarter.

However, iPhone sales in China fell by 11% amid growing competition from domestic rivals like Huawei.

Further Earnings Ahead

Investors’ eyes will turn to other upcoming results this week, with Alphabet, Amazon, and Palantir set to release their earnings.

In addition to questions about DeepSeek’s impact, there will be a focus on Microsoft’s cloud business growth after last week’s disappointing results, which could have implications for both Alphabet and Amazon, whose AWS cloud segment is a major revenue driver.

The results follow Amazon’s reported record online spending during the holiday period and as it continues to develop its own AI chips and satellite-based broadband network.

However, analysts highlighted  “uncertain costs” related to Amazon’s satellite project and “rising costs” for AI development.

For Alphabet, digital advertising demand remains strong for both Google and YouTube, but it may be difficult for the company to significantly exceed estimates for advertising growth, especially with foreign exchange headwinds and tougher comparisons heading into 2025.

For Palantir Technologies, analysts expect  adjusted earnings of 11 cents, up 39%, with revenue growing 28% to $776 million, driven by a 52% increase in U.S. commercial revenue.

Jefferies analysts warn that the Q4 setup may be challenging, and any signs of slowing growth could lead to multiple compression.

Palantir stock has surged 340% in 2024, with significant gains after Donald Trump’s win and a third-quarter earnings beat, reaching an all-time intraday high of $84.80 on Dec. 24.

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Giuseppe Ciccomascolo

Giuseppe Ciccomascolo began his career as an investigative journalist in Italy, where he contributed to both local and national newspapers, focusing on various financial sectors. Upon relocating to London, he worked as an analyst for Fitch's CapitalStructure and later as a Senior Reporter for Alliance News. In 2017, Giuseppe transitioned to covering cryptocurrency-related news, producing documentaries and articles on Bitcoin and other emerging digital currencies. He also played a pivotal role in establishing the academy for a cryptocurrency exchange website. Crypto remained his primary area of interest throughout his tenure as a writer for ThirdFloor.
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