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Tech Market Values Fall on AI Costs and Recession Fears; Eli Lilly, Berkshire Gain

]The logo for Google is seen at the Google Store Chelsea in Manhattan, New York City, US, November 17, 2021. REUTERS/Andrew Kelly/File Photo Purchase Licensing Rights
]The logo for Google is seen at the Google Store Chelsea in Manhattan, New York City, US, November 17, 2021. REUTERS/Andrew Kelly/File Photo Purchase Licensing Rights
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Tech Market Values Fall on AI Costs and Recession Fears; Eli Lilly, Berkshire Gain

]The logo for Google is seen at the Google Store Chelsea in Manhattan, New York City, US, November 17, 2021. REUTERS/Andrew Kelly/File Photo Purchase Licensing Rights
]The logo for Google is seen at the Google Store Chelsea in Manhattan, New York City, US, November 17, 2021. REUTERS/Andrew Kelly/File Photo Purchase Licensing Rights

Market values of major tech firms declined in August amid concerns over escalating artificial intelligence infrastructure costs and rising recession risks that would make the stocks particularly vulnerable during a market correction.

Last month, Alphabet Inc's lost 4.7% of its market value as a slowdown in YouTube's advertising sales fuelled concerns about its earnings. A US judge's ruling that Google had violated antitrust laws and the emergence of new competition from OpenAI, which is developing an AI-based search engine prototype, also contributed to its shares' decline.

Amazon.com Inc's market value fell 4.5%, affected by slowing online sales.

Tesla's market capitalisation fell 7.7% last month after weaker Q2 earnings and following the news that Canada planned a new 100% tariff on Chinese-made electric vehicles, Reuters reported.

The world's most valuable automaker started shipping Shanghai-made EV's to Canada last year and Ottawa's plans raised concerns about the potential profit impact of exporting from its higher-cost US production base.

Meanwhile, Nvidia's market value fell in the last week of August by 7.7% to $2.92 trillion, after it projected third-quarter gross margins below market estimates and reported revenues that only met expectations, disappointing investors who were expecting a stronger performance.

Nvidia, which commands more than 80% of the AI chip market, stands in a unique position as both the largest enabler as well as beneficiary of surging AI development.

On a positive note, US drugmaker Eli Lilly's market value surged nearly 20%, leading market gainers, driven by robust sales and the launch of a weight-loss drug that significantly reduces the risk of developing type 2 diabetes in overweight adults.

Berkshire Hathaway's market value closed above $1 trillion for the first time at the end of August, reflecting investor confidence in the conglomerate that Warren Buffett built over nearly six decades into what many consider a proxy for the US economy.

Meta's market value also climbed nearly 10% after it beat market expectations for its second-quarter revenues and forecast strong revenue growth in the July-September quarter, indicating that strong digital ad spending on its platforms could offset the costs of its AI investments.

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Xiaomi Raises EV Sales Target, Plans New Overseas Stores as Q4 Revenue Jumps

A man walks past a logo of Xiaomi, a Chinese manufacturer of consumer electronics, outside a shop in Mumbai, India, May 11, 2022. (Reuters)
A man walks past a logo of Xiaomi, a Chinese manufacturer of consumer electronics, outside a shop in Mumbai, India, May 11, 2022. (Reuters)
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Xiaomi Raises EV Sales Target, Plans New Overseas Stores as Q4 Revenue Jumps

A man walks past a logo of Xiaomi, a Chinese manufacturer of consumer electronics, outside a shop in Mumbai, India, May 11, 2022. (Reuters)
A man walks past a logo of Xiaomi, a Chinese manufacturer of consumer electronics, outside a shop in Mumbai, India, May 11, 2022. (Reuters)

China's Xiaomi on Tuesday reported an almost 50% jump in fourth-quarter revenue, beating analyst estimates, and raised its target for electric vehicle deliveries this year to 350,000 from 300,000.

The world's third-largest smartphone maker, whose product lines extend to home appliances and cars, also said it planned to expand its store network across China this year and open 10,000 new Mi Home stores overseas in the next five years.

The company reported a 48.8% rise in fourth-quarter revenue to 109 billion yuan ($15.1 billion), beating the 103.94 billion yuan average of 17 analyst estimates compiled by LSEG. Adjusted net profit jumped 69.4% year-on-year to 8.32 billion yuan, ahead of the average estimate of 6.399 billion yuan, Reuters reported.

Xiaomi president Lu Weibing said on an earnings call that he saw great potential for the company's products - from phones and tablets to cars - in overseas markets, though he added the complexity of expanding abroad was "quite high". Lu said the company aimed to start shipping cars overseas in 2027. Xiaomi's Hong Kong-listed shares closed up 3.3% before the earnings release. The stock has surged 284% over the past 12 months amid investor enthusiasm for its EV plans.

Xiaomi began manufacturing EVs last year with the launch of the SU7 sedan after selling smartphones, household appliances and smart gadgets for most of its 15-year history.

It reported 32.1 billion yuan in revenue for its EV business in 2024, delivering more than 135,000 SU7 sedans. The adjusted net loss related to its EV and other new initiatives reached 6.2 billion yuan.

Xiaomi's fourth-quarter global smartphone shipments rose 5% from a year earlier to 42.7 million handsets, ranking it third globally, with a market share of 13%, data from researcher Canalys showed.

In China, its largest market, shipments surged 29% to 12.2 million handsets over the same period, ranking it fourth, with a market share of 16%, according to the Canalys data.

Lu said Xiaomi aimed to ship 180 million smartphones this year, versus

in 2024, adding the company would invest up to 8 billion yuan, about a quarter of its total research and development budget this year, in AI-related initiatives.