Rounding off a week that couldn’t have gone much worse for “Big Tech”, Amazon saw its market cap slashed by almost $130 billion as markets opened on Friday, after delivering a disappointing earnings report on Thursday. The e-commerce giant narrowly missed sales expectations for the third quarter, but what mostly spooked investors was its guidance for the important holiday quarter, which predicts a significant slowdown in year-over-year sales growth garnished with a high degree of uncertainty. “Our results are inherently unpredictable,” Amazon’s guidance reads, before rattling off a long list of factors that could affect the company’s business. The company expects sales to grow between 2 and 8 percent in the fourth quarter, including a negative 460 basis point impact from currency headwinds.
Amazon is not the first tech giant to be punished by investors this week. Alphabet, Microsoft and Meta all saw their shares tank in the wake of their earnings reports, with Apple the only one of the pack delivering on-par results. As the following chart shows, the five companies formerly known as GAFAM collectively lost $700 billion in market cap since Tuesday, when Google parent Alphabet and Microsoft reported their earnings. Having thrived when many companies struggled during the Covid-19 pandemic, the world's most famous tech companies experienced a rude awakening in 2022 - and so did their shareholders. Rapidly rising interest rates, inflation woes, lingering supply chain problems and geopolitical tensions have created an inhospitable business environment, with the strong dollar further weighing on results.