US tech stocks rocked by £1.6trillion rout

AROUND £1.6trillion has been wiped off the value of US tech stocks this year.

Shares in Netflix, Facebook owner Meta, Amazon and Google parent Alphabet have collapsed in the past four months.

Tesla, Microsoft and Apple have also struggled as investors fear fast-growing firms – especially those that boomed during the pandemic – are running out of steam.

The slump – valued at £1.6trillion among those seven stocks – has cost the tycoons of Silicon Valley billions, with Elon Musk’s stake in Tesla falling £25bn in four weeks.

Amazon founder Jeff Bezos has seen the value of his stake decline by £32bn.

The rout has also hit pensions and investments of millions of savers as many British households are exposed through individual shareholdings or popular funds stuffed full of US tech stocks, such as Scottish Mortgage Investment Trust and Fundsmith.

Richard hunter, head of markets at Interactive Investor, said that while the techheavy Nasdaq index in New york had experienced a ‘tough time’ this year, investors who piled in five years ago would still have ‘more than doubled’ their money.

The Nasdaq has boomed as investors snapped up shares in Tesla, Netflix and Amazon. And while it is down around 20pc this year, it is up nearly 90pc since the start of 2019. The recent sell-off has come amid doubts that many of these companies can continue to grow at the pace required to justify their high valuations.

Amazon shares fell another 15pc yesterday after it posted its first quarterly loss since 2015 while Apple was down 4pc as it warned of a £6.5bn hit from supply chain shortages and factory shutdowns in China.

Netflix tumbled 35pc in a day last week and Tesla has fallen more than 15pc after boss Elon Musk took a 9pc stake in Twitter and launched a £35bn takeover bid.

The sector has also been hit by fears over the economic outlook and the prospect of higher interest rates.

But hunter said it would not be wise to begin betting against the tech giants. ‘A lot of these companies have very dominant positions [in the market]... Apple continues to be strong on a global basis. Microsoft continues to race ahead. All of these stocks have strong pricing structures so investors will bet against them at their peril.’