With quarterly earnings from tech's mega-cap companies largely in the rearview mirror, one thing is clear: Wall Street is nervous.
The Nasdaq Composite slumped 3.4% this week, bringing its three-week slide to 8.8%. That's the worst performance for the tech-heavy index over that length of time since September 2022, when the market was in free fall due to soaring inflation and rising interest rates, according to FactSet.
Since the end of 2022, the narrative has been mostly positive for the tech sector, with the U.S. economy in recovery following the pandemic, and excitement building around the growth opportunities sparked by artificial intelligence.
The Nasdaq surged 43% last year, and remains up 12% year to date, after climbing to a record last month.
But the past earnings season has been disappointing, with some companies pointing to weaker-than-expected growth and others raising concern that the AI infrastructure buildout may hit some snags.
Hovering over the industry are concerns about the overall U.S. economy. The Labor Department said on Friday that job growth slowed much more than expected during July, while unemployment ticked higher, a day after economic data showed an unexpected jump in filings for unemployment benefits and a weakening of the manufacturing sector.
Josh Koren, founder of Musketeer Capital Partners, said tech giants with trillion-dollar-plus valuations are increasingly a macroeconomic play because they're so big that softness in the overall data is naturally going to show up in their results.
Amazon and Apple both reported earnings on Thursday, with Amazon missing on revenue and issuing a disappointing forecast and Apple showing top-line growth of just 5%.
"As the economy slows down, a business like Amazon, like Apple, they're going to slow down as well," Koren told CNBC's "Squawk Box Europe" on Friday. "That's what you're seeing in the earnings."
Amazon plunged 8.8% on Friday, bringing its three-week decline to 14%. Executives on the earnings call attributed some of the revenue shortfall to consumers buying cheaper household goods and fewer bigger-ticket items like computers and TVs.
"We're seeing a lot of the same consumer trends that we have been talking about for the last year, consumers being careful with their spend, trading down," Amazon finance chief Brian Olsavsky said on the call. "We're seeing signs of it continuing in Q3."
Apple's results were less concerning — the company beat estimates for earnings and revenue — and the stock ended slightly higher on Friday and for the week. But that came after a drop of more than 5% the prior two weeks.
Microsoft slid 4% this week and is down 10% over the past three weeks. The tech giant issued a weaker-than-expected forecast for the current quarter and missed on growth in its Azure cloud segment. Analysts at Mizuho wrote in a note after the report that Azure "core consumption was impacted by capacity constraints and softness in certain European geos."
Shares of Alphabet were down slightly this week following a 10% drop the previous two weeks. In its earnings report, the company's YouTube advertising revenue missed estimates and it managed only 11% overall ad growth. That was far below rival Meta, which expanded 22%.
Meta is the exception
Meta was the standout among the group, with it stock rising almost 5% this week after the company beat Wall Street estimates and issued an optimistic forecast for the current quarter. CEO Mark Zuckerberg said the company's hefty investments in AI are paying off by creating more relevant ads and making it easier for marketers to create campaigns.
"The ways that it's improving recommendations and helping people find better content, as well as making the advertising experiences more effective, I think there's a lot of upside there," Zuckerberg said on the earnings call last month. "Those are already products that are at scale. The AI work that we're doing is going to improve that."
Even after that rally, though, Meta is down over the past three weeks.
The one mega-cap tech company that's yet to release results is Nvidia, which has been the biggest winner in the AI boom. The stock is down 17% over the Nasdaq's three-week slump, though it's still up more than 110% year to date.
Nvidia counts on spending from its top tech peers as they build out their AI infrastructure. Because of Nvidia's parabolic rally over the past few years, any sign of potential slippage can have an outsized impact on its stock. The company is scheduled to report results on Aug. 28.
On the flip side of the semiconductor market is Intel.
Formerly the world's largest chipmaker, Intel has gotten trounced by rivals in recent years and is far behind in the AI race. The stock had its worst day in 50 years on Friday, plummeting 26% to a level not seen since 2013.
Intel reported a big earnings miss and announced a mass restructuring that includes eliminating 15% of its workforce. CEO Pat Gelsinger told CNBC on Friday that it's the "most substantial restructuring of Intel since the memory microprocessor transition four decades ago." Investors aren't confident it's going to work.
In a note on Friday, analysts at KeyBanc Capital Markets lowered estimates and maintained their hold recommendation on the stock, citing a tough road ahead.
"With all the challenges INTC has, such a major headcount reduction is likely going to make it more difficult to achieve its targets," they wrote.
