Based on the losses from each company’s high point in recent months, more than $1 trillion in value has been erased. Facebook, Apple and Amazon have endured the greatest declines, all down more than $250 billion from their respective peaks.

That is a marked reversal for one of the most popular trades on Wall Street. Investors piled into shares of the largest tech companies, betting their revenue would continue to grow strongly as these behemoths upended industries from retail to communication to media.

By the end of August, the market value of Apple and Amazon had each surpassed $1 trillion, and Alphabet was flirting with $900 billion. The combined market value of the five had reached $3.6 trillion.

But worries about global economic growth as well as lackluster earnings and outlooks for the past two quarters have shaken investors’ confidence. In particular, concerns have mounted about how many new iPhones Apple will manage to sell. Facebook has spent much of the year mired in scandal, raising the specter that the U.S. government will tighten regulation of big tech. All of that has investors questioning whether the values of these big tech companies have become too lofty.

Of course, Facebook, Amazon, Apple, Netflix and Alphabet have faced steep sell-offs before, only to bounce back quickly. Just this year, the combined market value of those five companies has tumbled 7 percent or more during three separate periods. In each instance, the stocks resumed their march to fresh highs within weeks.

The question now, though, is whether this time will be different.

The New York Times

Stephen Grocer © 2018 The New York Times