Has the luster gone from investing in tech companies?

Khaled Badr El Din _ After global tech companies including Facebook, Apple, Amazon and Google suffered huge losses during the first six months of this year, wiping more than $3.3 trillion off their market value, they rebounded in July to post their best monthly performance in scoring more than two. years.

Analysts wonder: Have the technology companies that have thrived for decades and reached unprecedented heights in their market value exceeding one trillion dollars, as happened with the American company Apple, lost their luster, or will they recover and return to the record levels that appeared in recent years?

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Apple stock prices fell $900 billion in the first half of this year

The technology industry has managed to create the largest companies by market value in the world, and has also made it one of the best companies to attract investors thanks to continuous innovations in advanced electronic devices, for example the South Korean company Samsung for Devices, which in 1969 was founded and became one of the largest global technology companies, gaining a share of more than 30% of the global TV market for 16 consecutive years until last year.

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But some companies, such as Apple Electronics, lost about 29% of their market value, Alphabet, owner of the Google search engine, fell by almost the same percentage, Amazon, the online retailer, by 54%, and American semiconductor company Nvidia also fell by almost 81% during the same period.

Declining market value due to war, inflation and interest rates

The report by Global Data, a consultancy and analysis of financial market data, stated that the worsening of geopolitical tensions between Russia and Ukraine, the increase in inflationary pressures and the tendency of major central banks such as the US Federal Reserve and the Bank of England to raise interest rates led to a drop in the market value of 24 of the 25 largest technology companies in the world.

Itwire.com stated that the increase in the inflation rate in both developed and developing countries and even in the United States and European countries to record levels, in addition to the high interest rates, has led to the wholesale layoff of workers in global technology companies and the drop in their share prices during the first half of the current year.

Share losses of 24 of the 25 largest technology companies in the world

Technology companies have suffered big losses this year, and the Nasdaq index, which is dominated by tech companies, fell about 25% from the beginning of last January to the end of the first half of this year, similar to what happened in 2000 when technology companies collapsed, which was known as the dotcom crisis, But the difference this year is that technology companies that lost huge amounts of money during the first half are leading the global markets in their various sectors and are not just profit-seeking companies.

US technology companies rebounded in July after major companies announced an increase in their earnings during the past quarter, including Amazon, whose share price jumped more than 10% on the rise in its revenue than expected, and Apple with about 3%, whose sales of iPhones have stopped, analysts expected.

Technology companies worldwide, including Meta, the owner of Facebook for social networking sites, Apple for computers and mobiles, Amazon for online retail sales, and Google, the electronic search engine, suffered large losses in their market value from the beginning of January to the end of the second quarter of this year.

Bloomberg Agency reported that the three major US indexes Nasdaq, Dow Jones Industrial Average and S&P 500 of major US companies recovered in July, led by the technology sector, whose companies achieved high revenues. The first of this year.

The U.S. Nasdaq index of technology companies jumped more than 12% in the month of July, which ends today, to record its biggest monthly gain since April 2020, thanks to some tech companies announcing second-quarter earnings that beat expectations has. of this year, including Amazon and Apple.

IBM is the only US company in the technology sector among the top 25 global companies, whose market value rose by about 3% at the beginning of July, thanks to the improvement of cloud computing technology and artificial intelligence programs, compared with a decline of more than 20% for the Standard & Poor’s 500 S&P index of large US companies.

The market value of the seven largest technology companies in the world fell by more than $100 billion each during the past quarter, with the massive selling of its shares, confirmed Rajopathi Jayaraman, an expert in business fundamentals analysis at Global Delta.

Apple tops the tech sector’s losses in market value

US company Apple led the tech sector’s losses with its market value collapsing by nearly $900 billion over the past two quarters, bringing its market value down from $3.1 trillion to $2.2 trillion as of the end of last week as weak consumer confidence and supply chain disruptions of industrial components, especially semiconductor chips. .

The market value of the American company Microsoft fell by more than 390 billion dollars in the second quarter of this year, but analysts at the company expect a return to last year’s high levels.

Meta’s share prices were affected, along with increasing inflationary pressures and interest rates, to lose more than 50% of its market value during the first six months of this year, especially on February 3, when the shares lost more than 25% in the biggest daily loss in the market value of any US company after Facebook announced thin revenue forecasts due to increased competition from social media platforms including Snap, Twitter and Pinterest and changes to privacy protections.

Meta, the owner of Facebook, lost more than 50% of its value

Although the American company Google, the owner of the largest search engine in the world, has consistently maintained its market value at $1.5 trillion for the past few quarters, it lost about $400 billion of its value during the last quarter, especially with the rising expectations that the US economy will fall into the abyss of recession this year. Investors lack confidence in US technology stocks.

Jayaraman noted that semiconductor chip makers such as Nvidia of America and Taiwan Semiconductor also lost more than $100 million each during the second quarter of last year due to the global chip shortage crisis, worsening supply constraints and lack of demand due to the global recession.

If the market value of Taiwan Semiconductor Company fell by about $100 billion during the current quarter, its market value is expected to jump by almost 50% in the long term.

Technology companies have recorded tremendous growth in the past decades because their innovative products and business models have helped to improve the lifestyles of the people of the planet in an unprecedented way that investing in them has been the best way to achieve profits and indeed many of them have turn into the largest companies in the world and the most market value better than all other industrial sectors.

With the transformation of the economy to globalization, the markets of these companies have expanded, affecting any decision they make in most industries and around the world, to lead the top 10 technology companies in global markets, but seven of them are American companies, only one from China, another from Taiwan and the last from South Korea.

Global tech companies lose $3.3 trillion in market value

The list of the top 10 most powerful global technology companies is topped by the American Apple, whose market value reached 2.5 trillion dollars in July and sales approaching 366 billion dollars, followed by Microsoft with a market value of one trillion dollars and sales of more than 168 billion dollars, equivalent to the market value of the economy of France, the third largest economy in the world after the United States of China, ahead of Italy and Canada, according to World Bank data.

Alphabet Inc. ranks third and is also the owner of Google, the largest search website in the world, with more than $1.5 trillion in market capitalization and about $258 billion in sales.

In fourth place was Amazon, the largest online sales company in the world, with a market value of $1.3 trillion and sales of about $470 billion, and Amazon expects to have a fleet of electric vans to deliver orders to customers by 2039 after its CEO Elon Musk has his global headquarters to the city of Austin. Texas moves from California due to COVID-19 pandemic restrictions and high taxes.

American electric car maker Tesla came in fifth with about 845 for its market value, but its sales stopped at nearly 54 billion dollars, and in sixth place is Meta, the owner of Facebook, which has a market value of about 496 billion dollars have. and sales are approaching 118 billion dollars, and Facebook owns more than 2.94 1 billion active users every month worldwide.

In seventh place was the Taiwanese TSM Semiconductor Company, with a market value of more than 455 billion dollars and sales of 54 billion dollars, then the American company for semiconductors and artificial intelligence technology Nvida, which has about 22,000 employees working in more than 50 countries work. with about 450 billion dollars and sales of 27 billion dollars.

And then Tencent Holdings, the Chinese company that specialized in the Internet and games, with a market value of 416 billion dollars, and its sales exceeded 87.9 billion dollars. Finally, the South Korean electronics company SMSN, with a market value of 318 billion dollars, and its sales approaching 233 billion dollars.

But the South Korean company, Samsung, posted a 21% increase in revenue and 11% in its profit to reach the highest level since 2018, thanks to the increase in its sales of smartphones, which numbered more than 74 million units has during the first quarter of this year, and the rise in sales of semiconductor chips.

Laying off workers to cut expenses

Another technology company that has suffered losses this year is cryptocurrency Coinbase, which announced that its revenue fell 27% during the first quarter of this year, sending its share price down more than 25% last May to the lowest level in its history, and its market value has fallen by more than half from 130 billion dollars, compared to 53.7 billion dollars in May 2021, while its market value has fallen by about 72% to the end of June, a decrease of 81% from the highest level in its history when it reached almost 369 billion dollars last November.

Twitter announced at the beginning of July that it would lay off around 30% of its workforce to cut costs, and its CEO, Paraj Agrawal, confirmed the hiring freeze and the reduction in spending so that it could meet its growth target this year. in revenue and the number of users it faces amid the problems it faces from Elon Musk, who wants to acquire it in a $44 billion deal, but he backed down and claimed that it was not does not meet the conditions he requested at the beginning. of the purchase transaction.

The Russian war in Ukraine has also led to the suspension of the services of American technology companies in Russia, such as Apple services and Twitter, the second platform that Russia has blocked and imposed restrictions after Facebook, although the American company Twitter confirmed that it will take all necessary measures to restore its services in Russia.

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