The world’s top 25 tech companies saw a collective decrease in market capitalization worth over $600 billion in the third quarter (Q3) of the year. This data is according to a report published by London-headquartered analytics firm GlobalData.
This quarter’s dip contrasts their robust performance in the previous three-month period. At that time, these firms amassed more than $2 trillion.
Factors affecting market capitalization
Market capitalization refers to the value of a company publicly traded on the stock exchange. In the tech sector, the stocks of prominent players were affected by several factors. These include high bond yields and an economic slump due to rising oil prices.
The Artificial Intelligence (AI)-driven market surge that the sector experienced, with peak figures recorded earlier in June, has also started to wane. This further contributed to the loss in market capitalization.
Leading tech firm’s performance
In Q3 2023, top tech firm Apple Inc. suffered a loss of over $380 billion, reflecting a decline of 12.5 percent. Nonetheless, the tech giant still recorded a 29 percent increase in its valuation compared to its end-of-2022 figures.
“Apple’s stock peaked during the quarter, hitting a market capitalization of $3.07 trillion on July 31, 2023. But the stock was dented by the news of the Chinese government’s decision to expand the ban on Apple products to state companies and government-sponsored entities,” disclosed Gracio Benher, a business fundamentals analyst at GlobalData.
Benher further emphasized that although the Chinese government refuted such claims, the damage had already been inflicted on the company’s stock.
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Also among the biggest losers in Q3 are ASML, TSMC, and Texas Instruments. These companies posted a decrease worth 18 percent, 12.4 percent, and 11.6 percent, respectively.
“Going into the last quarter of 2023, the deflated tech stocks may get a boost from the third-quarter earnings, which are expected to benefit from strong consumer demand and a resilient economy,” expressed the analyst.
Nonetheless, he added that continually increasing oil prices and the Israel-Palestine conflict could hinder recovery.
Semiconductor stocks
While the collective market capitalization of the world’s leading tech firms experienced a decline, semiconductor stocks, in particular, had mixed results during Q3.
Alphabet and Meta Platforms are notable gainers. Their market values increased by over $145 billion and $46 billion, respectively.
Meanwhile, NVIDIA recorded a modest growth of 1.86 percent. This comes after the US-based chip manufacturer secured $19 billion in the third quarter. Looking at the broader perspective, the company saw an impressive 196 percent surge in its share value since the start of 2023.
Apart from ASML and Texas Instruments, AMD and Applied Materials are also among those who encountered losses.
Tech firms’ role in the GCC
Tech companies play a vital role in advancing digital economies around the world.
According to a PwC report, the global digital economy is currently growing six times faster than its traditional counterpart. By 2025, it can contribute up to 25 percent of global gross domestic product. At present, the US and China hold commanding positions, thanks to their “tech champions.” These tech firms make up about 90 percent of the market capitalization of the 70 biggest digital companies in the world.
PwC emphasized the countries in the Gulf Cooperation Council (GCC) can develop their own tech champions to drive their digital economies forward.
“Such companies provide the economies of scale and scope necessary for innovation, talent attraction, job creation, large-scale investment, and exports. A thriving technology ecosystem leads to a strong digital economy,” stated the report.
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