Tech Stocks Slip Amid Rising AI Costs and Recession Fears; Eli Lilly and Berkshire Hathaway See Gains

In August, major technology companies saw a significant decline in market value as concerns mounted over increasing artificial intelligence (AI) infrastructure costs and fears of a looming recession. These factors have made the tech sector more susceptible to market corrections.

Alphabet Inc. (Google's parent company) saw its market value drop by 4.7% due to a slowdown in YouTube ad revenue and new competition from OpenAI, which is developing an AI-powered search engine prototype. Additionally, a U.S. court ruling found Google in violation of antitrust laws, further contributing to its decline.

Amazon.com Inc. also experienced a 4.5% reduction in market value, largely due to a deceleration in online sales.

Tesla was hit hard, with its market capitalization falling 7.7% after disappointing second-quarter earnings and the announcement that Canada plans to impose a 100% tariff on Chinese-made electric vehicles. Tesla, which ships EVs from its Shanghai factory to Canada, faces potential profitability challenges from this development.

Nvidia’s market value also dropped by 7.7%, despite its dominant position in the AI chip market. Investors were disappointed by its third-quarter revenue forecast, which only met expectations, while gross margins came in below market estimates. Nvidia commands more than 80% of the AI chip market and has been both a key enabler and a major beneficiary of the rapid growth in AI development.

However, it wasn't all bad news. Eli Lilly, a U.S. pharmaceutical giant, saw its market value surge nearly 20% in August, driven by strong sales and the launch of a weight-loss drug that reduces the risk of type 2 diabetes in overweight adults. This propelled Eli Lilly to the top of the market gainers list.

Berkshire Hathaway, led by Warren Buffett, closed August with a market value surpassing $1 trillion for the first time in history. The conglomerate's performance is often seen as a barometer of the U.S. economy, and investors have shown confidence in its long-term stability.

Meta (Facebook's parent company) also saw its market value rise by almost 10%, thanks to better-than-expected second-quarter earnings. The company is optimistic about continued revenue growth through strong digital ad spending, which is expected to offset the heavy costs of its AI investments.