Magnificent Seven ETFs Drop Amidst Tech Sector Concerns
Concerns over lackluster guidance and plans for record capital investment weighed on the Magnificent Seven trade this past week. The Roundhill Magnificent Seven ETF (MAGS) fell 2.4% over the last five trading days, led by Alphabet's (GOOG, GOOGL) 9.2% drop and Amazon's (AMZN) 3.6% decline.
DeepSeek Concerns and AI's Growth Potential
The tech sector continues to face headwinds following the DeepSeek-driven sell-off last month, as investors feared competition from a cheaper open-source large language model. However, industry experts view DeepSeek's development as a catalyst for the industry. Zack Kass, OpenAI's former head of Go-To-Market, suggests that DeepSeek advancements could accelerate AI innovation and adoption.
AI Network Stocks Poised for Growth
While hyperscalers and chipmakers have been the traditional focus for AI investments, experts recommend considering AI network stocks. As AI models like DeepSeek's R1 increase compute demand, the need for high-speed networking solutions will surge.
Beneficiaries of AI Infrastructure Growth
Bank of America, T. Rowe Price, and Stifel analysts identify Ciena (CIEN), Coherent (COHR), Celestica (CLS), and Arista Networks (ANET) as potential beneficiaries of the growing demand for robust and high-speed networking infrastructure for AI applications.
Analyst Upgrade for Arista Networks
Morgan Stanley analyst Meta Marshall upgraded Arista Networks to Overweight ahead of its earnings report on Feb. 18. The recent DeepSeek-driven sell-off has made shares more attractive, according to Marshall.
Disclaimer: The information provided is for informational purposes only and should not be construed as investment advice. Consult a financial professional before making any investment decisions.