Tech giants lose $2 trillion in SpaceX’s IPO month: ‘The valuations were unsustainable’

The enormous sums committed to developing artificial intelligence are making investors nervous

The Magnificent Seven tech giants, including Nvidia, Apple, Microsoft, Alphabet, Meta, Amazon, and Tesla, lost a combined $2 trillion in market value in June. This decline marks a 10% correction in their stock prices, the largest in recent history. The sharp decline is attributed to investors' growing concerns over the enormous sums committed to developing artificial intelligence. Specifically, Nvidia's stock price fell by 15% in June, while Apple's stock price declined by 8%.

The decline in tech giants' stock prices will likely lead to an increase in the cost of cloud computing services, affecting businesses that rely heavily on these services. For instance, companies using Amazon Web Services (AWS) may see a rise in their monthly bills, which could impact their bottom line. This, in turn, may lead to higher prices for consumers who use services provided by these businesses. As a result, consumers may see a slight increase in the prices of online services they use daily.

The tech industry's focus on artificial intelligence has been building up for years, with companies investing heavily in AI research and development. In 2020, the tech giants spent a combined $100 billion on AI research, a number that has been increasing steadily. Insiders know that the valuations of these companies were unsustainable, and the correction was inevitable. The decline in stock prices is a reflection of the market's realization that the returns on investment in AI may not be as high as previously thought.

Investors will be watching the upcoming earnings reports of the tech giants, particularly Nvidia and Alphabet, which are scheduled to release their quarterly earnings in late July. The reports will provide insight into the companies' AI investments and their impact on the bottom line. Interestingly, despite the decline in stock prices, the tech giants continue to invest heavily in AI, with some insiders speculating that the true potential of AI may only be realized in the next decade, making the current decline a minor setback in the long run.