After a tough week, investors are hopeful about big tech gains.
The markets had a difficult week last week, with most major indices falling. The Nasdaq Composite ended the week down 5.5% at 15,282, while the large-cap S&P 500 index closed below 5,000, down 3% at 4,967.
Only the Dow Jones Industrial Average had a positive week, up 3 points from Friday’s close to 37,986. The small-cap Russell 2000 fell 2.7% to 1,948.
What causes the sell-off?
A major reason for the market decline last week was the massive sell-off in Magnificent Seven stock. nvidia (NASDAQ:NVDA) shares were down 10% on Friday and 13.6% for the rest of the week.
Semiconductor stocks have led the market over the past year and a half by utilizing artificial intelligence (AI) chips. Last year, it rose 239%, and in 2024, including last week’s sell-off, it has already surged 58% compared to the beginning of the year.
There really was no direct catalyst that brought down NVIDIA. Rather, it had more to do with another AI-based stock. super micro computer (NASDAQ:SMCI). The company builds servers and provides storage for high-performance computing and AI data centers.
The company, known as Supermicro, slumped 23% on Friday after it did not pre-release fiscal third-quarter sales results, as it typically has during its larger operations in recent years. That decision led many investors to believe that the company’s results might not be as good as expected, ultimately leading to a sale. Supermicro has confirmed its next earnings report date is April 30.
Not only did Supermicro stock plummet as a result of this news, or lack thereof; It also hurt most AI-related stocks, including NVIDIA, whose chips are used in Supermicro servers.
Big Tech Report of the Week
The markets opened on a positive note Monday with the S&P 500 and Nasdaq rising after the opening bell.
This is a big earnings week for some major technology stocks, so investors may be cautiously optimistic about future results. Most notable is the social media giant meta platform (NASDAQ:META) is scheduled to report on Wednesday. microsoft (NASDAQ:MSFT) is scheduled to report quarterly earnings on Friday.
While analysts are bullish on these two stocks, another Magnificent Seven stock was released this week. tesla (NASDAQ:TSLA) is making investors nervous.
The automaker had another difficult week, with shares plunging 14% last week and continuing to fall on Monday. It fell another 3% to about $142 per share in early trading. Tesla has been facing a series of bad news over the past week, with reports that the company is cutting prices on several new models. This comes after the company saw a year-on-year decline in the number of vehicles delivered last quarter.
Tesla also issued a safety recall for its new Cybertruck last week due to issues related to the accelerator pedal sticking.
The company is scheduled to report quarterly earnings after the market closes on Tuesday, and based on trading activity on Monday, investors are a bit nervous about what they will hear.
This is going to be a really interesting week for the markets.
