- The S&P 500 (^GSPC) has dropped more than 10% in 2025, driven by a tech sector sell-off, with Nvidia (NVDA) and Meta Platforms (META) declining 24.5% and 14.3%, respectively, amid fears of a global economic slowdown impacting AI-driven investments.
- Stephen Yiu’s Blue Whale hedge fund, with 40% of its $1.5 billion assets in tech, sold Meta Platforms and Microsoft (MSFT) shares while increasing its Nvidia stake from 7% to 10%, citing risks to ad revenue and excessive AI spending.
- Hyperscalers spent $192 billion in 2024, with Meta’s capital expenditure rising to $39 billion from $27 billion, but rising unemployment, inflation, and tariffs announced on April 2 threaten tech firms’ growth plans.
The technology sector, a dominant force in the S&P 500 (^GSPC), has faced significant headwinds in 2025, with the index declining 10.2% year-to-date due to a 30% weighting in tech stocks that have broadly underperformed. Leading the downturn, Nvidia (NVDA) and Meta Platforms (META) have seen their stock prices drop 24.5% and 14.3%, respectively, amid concerns that a global economic slowdown could curb corporate budgets and disrupt the artificial intelligence investment boom that fueled growth since 2022. Stephen Yiu, who manages $1.5 billion in assets for Blue Whale hedge fund with 40% invested in tech, has responded to these market dynamics by adjusting his portfolio, selling Meta Platforms and Microsoft while increasing his Nvidia stake from 7% to 10% of assets, as reported by the Financial Times.
The surge in AI development, sparked by OpenAI’s ChatGPT reaching one million users in 2022, drove unprecedented capital expenditures, with hyperscalers like Amazon (AMZN), Microsoft (MSFT), and Google (GOOG) spending $192 billion in 2024, and Meta alone allocating nearly $40 billion, up from $27 billion in 2023. This investment fueled Nvidia’s revenue to $130 billion in fiscal 2025, a 114% increase in 2024, driven by demand for its H100, H200, and Blackwell chips critical for AI training. However, rising unemployment, persistent inflation, and declining consumer sentiment, exacerbated by a trade war and proposed tariffs announced by President Trump on April 2, have raised fears of stagflation or recession, potentially forcing tech firms to scale back capital expenditure plans.
Yiu’s strategic shift reflects these economic uncertainties, particularly the risk to Meta’s advertising revenue, which grew 21% year-over-year to $47.3 billion in the fourth quarter, but now faces pressure from a potential global slowdown. His decision to sell Meta, a 3% holding since 2023, and Microsoft, citing concerns over Microsoft’s AI spending outpacing cash flow, underscores a cautious outlook for firms reliant on discretionary spending. Conversely, Yiu’s increased investment in Nvidia, despite a $5.5 billion charge from restrictions on its H20 AI chip sales in China, signals confidence in the company’s role in the ongoing AI race. The broader market’s reaction to higher-than-expected tariffs has intensified fears of reduced growth, contributing to the tech sell-off and highlighting the sector’s vulnerability to macroeconomic shifts in 2025.
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